Alcoa, Saudi Aluminum Deal
In a blow to the plans to erect an aluminum complex in Saudi Arabia, in an effort to diversify its economy and cut its reliance on oil, Alcoa (NYSE:AA) announced they're slashing their stake in the project from 40 percent to 25.1 percent, leaving the Saudi government scrambling to find financing for it.
The aluminum plant is estimated to cost $10.8 billion, and the lowering of their stake in the company by Alcoa will result in a loss of over 33 percent in the financing for the project.
So the original investment by Alcoa of $4.32 billion will now be cut to $2.71 billion.
Although this won't stop the project, as the Saudi government, which is the major stakeholder, will step in and increase the financing to what is needed. But it does generate questions as to the viability of the project, as this is obviously a defensive move by Alcoa.
No comments:
Post a Comment