Separation Transactions

12 Months Ended

Dec. 31, 2019

Discontinued Operations and Disposal Groups [Abstract]

Separation Transactions

Separation Transactions

2019 Proposed Separation Transaction. On February 8, 2019, Arconic announced, as part of its strategy and portfolio review, a separation of its portfolio into two independent, publicly-traded companies (the "Separation of Arconic"). The EP&F segment will remain in the existing company (Remain Co.) which will be renamed Howmet Aerospace Inc. at separation. The GRP segment will comprise Spin Co. and will be named Arconic Corporation at separation. The Company has also executed on the sale of businesses that do not best fit into the EP&F and GRP segments. The Company is targeting to complete the Separation of Arconic on April 1, 2020. The Separation of Arconic remains subject to the satisfaction of certain conditions and may change if certain conditions are not satisfied by that date, as described in Arconic Rolled Products Corporation’s (“Arconic Corporation”) information statement filed with the Form 10.

On February 5, 2020, Arconic’s Board of Directors approved the completion of the separation by means of a pro rata distribution (the “Distribution”) by the Company of all of the outstanding common stock of Arconic Corporation. To consummate the separation and the Distribution, the Board declared a pro rata distribution of Arconic Corporation common stock, which is expected to be effective at 12:01 a.m. Eastern Time on April 1, 2020, to Company stockholders of record as of the close of business on March 19, 2020 (the “Record Date”). In the Distribution, each Company stockholder will receive one share of Arconic Corporation common stock for every four shares of the Company’s common stock held as of the close of business on the Record Date. Stockholders will receive cash in lieu of fractional shares of Arconic Corporation common stock.

Timothy D. Myers will serve as Arconic Corporation Chief Executive Officer. Arconic’s Board of Directors has also named new directors to the Arconic Corporation and Howmet Aerospace Boards. Joining the Arconic Corporation Board of Directors will be: Timothy Myers; William Austen; Christopher Ayers; Margaret Billson; Austin Camporin; Jacques Croisetiere; Elmer Doty; Carol Eicher; Fritz Henderson; E. Stanley O’Neal; and Jeffrey Stafeil. Christopher Ayers, Elmer Doty and Stanley O’Neal will resign from the Arconic Inc. Board of Directors. Joining the Howmet Aerospace Board of Directors will be: Joseph Cantie; Robert Leduc; Jody Miller; and Nicole Piasecki.

On February 7, 2020, the Company announced that Arconic Rolled Products Corporation (the “Issuer”), which is currently a wholly-owned subsidiary of Arconic, closed its offering of $600 aggregate principal amount of 6.125% second-lien notes due 2028 (the “Notes”). The Issuer intends to use the proceeds from the offering to make a payment to Arconic to fund the transfer of certain assets from Arconic to the Issuer in connection with the Separation of Arconic and for general corporate purposes. The net proceeds from the offering will be held in escrow until the completion of the separation and the satisfaction of certain other escrow release conditions. Prior to the separation, the Notes will not be guaranteed. Following the separation, the Notes will be guaranteed by certain of the Issuer’s wholly-owned domestic subsidiaries. Each of the Notes and the related guarantees will be secured on a second-priority basis by liens on certain assets of the Issuer and the guarantors.

On February 13, 2020, the Form 10 for Arconic Rolled Products Corporation was declared effective by the SEC.

In 2019, Arconic recognized $78 in Selling, general administrative, and other expenses on the accompanying Statement of Consolidated Operations for costs related to the Separation of Arconic.

2016 Separation Transaction. The separation of Alcoa Inc. into two standalone, publicly-traded companies, Arconic Inc. (the new name for Alcoa Inc.) and Alcoa Corporation, became effective on November 1, 2016 (the “Separation of Alcoa”). As part of the Separation of Alcoa, Arconic retained 19.9% of the Alcoa Corporation common stock (36,311,767 shares). In February 2017, Arconic sold 23,353,000 of its shares of Alcoa Corporation common stock at $38.03 per share, which resulted in cash proceeds of $888 which were recorded in Sales of investments within Investing Activities in the accompanying Statement of Consolidated Cash Flows, and a gain of $351 which was recorded in Other expense (income), net in the accompanying Statement of Consolidated Operations. In April and May 2017, the Company acquired a portion of its outstanding notes held by two investment banks (the “Investment Banks”) in exchange for cash and the Company’s remaining 12,958,767 Alcoa Corporation shares (valued at $35.91 per share) (the “Debt-for-Equity Exchange”) (See Note P). A gain of $167 on the Debt-for-Equity Exchange was recorded in Other expense (income), net in the accompanying Statement of Consolidated Operations. As of May 4, 2017, the Company no longer maintained a retained interest in Alcoa Corporation common stock.

As part of the Separation of Alcoa, Arconic was required to provide maximum potential future payment guarantees for Alcoa Corporation issued on behalf of a third party, guarantees related to two long-term Alcoa Corporation energy supply agreements, guarantees related to certain Alcoa Corporation environmental liabilities and energy supply contracts, letters of credit and surety bonds related to Alcoa Corporation workers’ compensation claims which occurred prior to November 1, 2016, and letters of credit for certain Alcoa Corporation equipment leases and energy contracts (see Note T).

As part of the Separation of Alcoa, Arconic received proceeds of $243 in 2017 related to Alcoa Corporation’s sale of its Yadkin Hydroelectric Project, which were included in Other within Investing Activities in the Statement of Consolidated Cash Flows.

During 2017, Arconic recognized $18 ($12 after-tax) in Selling, general administrative, and other expenses on the accompanying Statement of Consolidated Operations for costs related to the Separation of Alcoa.