Alcoa’s Plans to Split Concern Partner Alumina – by Lisa Beilfuss (Wall Street Journal – May 31, 2016)

Alcoa Inc. has yet to detail how its debt will be split over its two new companies, but joint venture partner Alumina Ltd. is trying to make sure it doesn’t get burdened by the aluminum maker’s bills.

Alumina’s concerns have led to an exchange of words and a series of meetings between the two companies, and to a lawsuit brought by Alcoa against its Australian partner. While the dispute isn’t expected to derail Alcoa’s plans to separate itself, Alumina’s message is clear: Don’t pass off your liabilities to us.

“They’re worried about the debt,” said CRT Sterne Agee analyst Joshua Sullivan, adding that Alumina is likely concerned about potential credit rating changes on its interest in the companies’ partnership.

Alcoa and Alumina have been joint-venture partners since the 1960s in AWAC, or Alcoa World Alumina and Chemicals, the world’s biggest producer of alumina and largest bauxite miner. Alcoa owns 60% of the venture, while Alumina holds the rest.

In September, New York-based Alcoa unveiled plans to boost its sagging stock market value by dividing its more profitable assets—those focused on the aerospace and automobile industries—from its less promising mining, refining and smelting business, dragged down by the commodities bust.

Alcoa spokeswoman Monica Orbe said the transaction is still on track to be completed during the second half of this year.

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