Aluminum giant Alcoa Inc. (NYSE:AA), the world’s largest producer of aluminum, agreed to pay $85 million in cash to settle its civil dispute with Aluminum Bahrain B.S.C (Alba), a state-owned aluminum smelting company, after years of court battles, according to a report from CNN.
In 2008, Alba filed a fraud and racketeering complaint against Alcoa Inc. (NYSE:AA). The lawsuit had been pending for years in the U.S. District Court for the Western District of Northern Pennsylvania.
Lee Ainslie's Maverick Capital had a difficult third quarter, although many hedge funds did. The quarter ended with the S&P 500's worst month since the beginning of the COVID pandemic. Q3 2021 hedge fund letters, conferences and more Maverick fund returns Maverick USA was down 11.6% for the third quarter, bringing its year-to-date return to Read More
In its lawsuit, Alba claimed that Alcoa Inc. (NYSE:AA) organized a scheme to corrupt the senior executives of Alba and Bahraini government officials, in order to secure favorable contracts for 15 years. Alcoa filed a motion to dismiss the case; however, the presiding judge rejected it, which brought major impact to the company’s finances.
Alcoa Inc. (NYSE:AA) settled the case against Alba, without admitting any misconduct or liability. Under the terms of the settlement agreement, Alcoa would pay the $85 million in two installments. The first half ($42.5 million) would be paid during the settlement, and the remaining amount would be made a year later.
According to the press statement of Alcoa, the U.S. aluminum giant also recorded in the settlement agreement, a $40 million charge ($15 million after-tax and non-controlling interest) in the third quarter, in addition to the $45 million charge ($18 million after-tax and non-controlling interest) the company posted in the second quarter.
In addition, the company also estimated an additional $25-30 million possible, after-tax charges reflecting the agreement between the shareholders of Alcoa World Alumina LLC, regarding the cash costs settlement of the Alba civil case. The cost will be recognized when settlement is approved by the DOJ and SEC.
Alcoa Inc. (NYSE:AA) and Alba also agreed to renew their business relationship, and signed a long-term aluminum supply agreement based on the Alumina Price Index-base. Alcoa will resume shipping alumina to Alba, which is favorable for both parties.
Meanwhile, Analysts expect Alcoa Inc. (NYSE:AA) to report earnings of one penny per share, and $5.6 billion revenue for its third quarter earnings for fiscal 2012, after the stock trading on Tuesday, October 9. The company’s sales performance remains weak, due to the sluggish global economy.