Howmet Aerospace Completes Debt Actions

Howmet Aerospace (NYSE: HWM) today reported the completion of debt actions in the fourth quarter 2023.

As previously disclosed, on November 22, 2023, the Company entered into two senior unsecured term loan agreements. One term loan facility is U.S. dollar denominated. The second term loan facility is Japanese yen denominated, and Howmet Aerospace’s operations in Japan provide a natural foreign currency hedge against the term loan facility. In December 2023, the Company drew $200 million from the USD Term Loan Facility and approximately $200 million from the JPY Term Loan Facility. The term loans are prepayable without penalties or premiums and mature in November 2026.

In December 2023, the Company also entered into interest rate swaps to exchange the floating interest rates of the approximately $400 million in term loans into fixed interest rates. With the benefit of the Company’s credit rating upgrade by S&P, the Company obtained a weighted average fixed interest rate of approximately 3.9%. All of Howmet Aerospace’s outstanding long-term debt continues to be unsecured and at fixed interest rates, which will provide stability of interest expense into the future.

On December 28, 2023, the Company completed an early partial redemption of its 2024 Notes in the aggregate principal amount of $500 million. The 2024 Notes were redeemed with approximately $106 million of cash on hand and approximately $400 million from the term loans at an aggregate redemption price of approximately $506 million, including accrued interest of approximately $6 million. Following this redemption, the aggregate outstanding principal amount of the 2024 Notes, which were inherited from Alcoa Inc. at an original outstanding principal balance of $1.25 billion, is approximately $205 million.

The combined impact of the term loans and the early partial redemption of the 2024 Notes is expected to reduce annualized interest expense by approximately $10 million.

S&P Rating Upgrade and Update Outlook to Stable

On December 15, 2023, S&P upgraded the Company’s Long-Term Issue Credit Rating to “BBB-” from “BB+” and updated the rating outlook to stable. With this upgrade, Howmet Aerospace is now rated as investment grade by two of the three credit rating agencies, reflecting the Company’s improved financial leverage and strong cash generation.

About Howmet Aerospace

Howmet Aerospace Inc., headquartered in Pittsburgh, Pennsylvania, is a leading global provider of advanced engineered solutions for the aerospace and transportation industries. The Company’s primary businesses focus on jet engine components, aerospace fastening systems, and airframe structural components necessary for mission-critical performance and efficiency in aerospace and defense applications, as well as forged aluminum wheels for commercial transportation. With nearly 1,150 granted and pending patents, the Company’s differentiated technologies enable lighter, more fuel-efficient aircraft and commercial trucks to operate with a lower carbon footprint. For more information, visit www.howmet.com.