ALERIS CORPORATION (NYSE:ARS) Files An 8-K Entry into a Material Definitive AgreementItem 1.01
On July26, 2018, Aleris Corporation, a Delaware corporation (the “Company”), Novelis Inc., a corporation organized under the laws of Canada (“Parent”), Novelis Acquisitions LLC, a Delaware limited liability company and an indirect, wholly owned subsidiary of Parent (“Merger Sub”), and OCM Opportunities ALS Holdings, L.P., a Delaware limited partnership, solely as representative for the stockholders, the optionholders and the RSU holders of the Company, entered into an Agreement and Plan of Merger (the “Merger Agreement”), to which Merger Sub shall be merged with and into the Company, on the terms and subject to the conditions set forth in the Merger Agreement (the “Merger”) at the effective time of the Merger (the “Effective Time”). The Company will continue as the surviving corporation in the Merger and shall succeed to and assume all the rights and obligations of Merger Sub in accordance with the General Corporation Law and the Limited Liability Company Act of the State of Delaware.
At the Effective Time, (i)each share of common stock of the Company, par value $0.01 per share (“Common Stock”), issued and outstanding as of the Effective Time (other than (x)shares of Common Stock owned by the Company or any of its wholly owned subsidiaries immediately prior to the Effective Time and shares of Common Stock owned by the Parent or any of its wholly owned subsidiaries immediately prior to the Effective Time (the “Excluded Shares”), or (y)dissenting shares) shall automatically be cancelled and converted into the right to receive (A)the Per Share Merger Consideration (as defined hereafter), in cash and without interest, and (B)the payments, if any, of the Earn-Out Consideration (as defined hereafter) and certain amounts (if any) released from the escrow account established to satisfy certain indemnification rights of Parent under the Merger Agreement, and (ii)each share of capital stock of Merger Sub issued and outstanding immediately prior to the Effective Time shall be converted into and become one validly issued, fully paid and non-assessable share of common stock of the surviving corporation and such shares shall constitute the only outstanding shares of capital stock of the surviving corporation as of the Effective Time.
Per Share Merger Consideration means an amount in cash equal to $775,000,000 (subject to customary purchase price adjustments), divided by the sum of (i)the number of shares of Common Stock issued and outstanding immediately prior to the Effective Time (excluding the Excluded Shares), plus (ii)the aggregate number of shares of Common Stock underlying options outstanding immediately prior to the Effective Time that have an exercise price that is less than the Per Share Merger Consideration, plus (iii)the aggregate number of shares of Common Stock represented by all RSUs (as defined below) outstanding immediately prior to the Effective Time, plus (iv)the aggregate number of shares of Common Stock actually issued upon conversion of any of the 6% Senior Subordinated Exchangeable Notes due 2020 issued by Aleris International, Inc. surrendered for conversion prior to the Effective Time.
The Earn-Out Consideration equals 50% of the amount (if any) by which the Company’s actual commercial margin for its North American business segment for calendar years 2018, 2019 and 2020 exceeds the Company’s forecasted commercial margin for its North American business segment for such periods. The Earn-Out Consideration is subject to an aggregate cap of $50,000,000. The Earn-Out Consideration is payable on an annual basis. In addition, up to EUR 8,541,000 ($10,000,000) of the Earn-Out Consideration may be used to satisfy certain indemnification rights of the Company under the Merger Agreement.
Furthermore, at the Effective Time, in accordance with the Aleris Corporation 2010 Equity Incentive Plan, as amended (the “Equity Incentive Plan”), (i) each then outstanding option that has an exercise price that is less than the Per Share Merger Consideration shall be cancelled and converted into the right to receive a portion of the merger consideration and, to the extent applicable, Earn-Out Consideration and indemnity escrow release payments, less the exercise price for such option, in cash and without interest, less required withholding taxes, in accordance with the terms of the Merger Agreement, subject to delivery by each option holder to the surviving corporation of an equity award surrender agreement, (ii)each then outstanding option that has an exercise price that is equal to or greater than the Per Share Merger Consideration shall be cancelled without any consideration being paid, and (iii)each then outstanding time-based vesting restricted stock unit award granted to the Equity Incentive Plan (each, an “RSU”) shall vest, be cancelled and converted into the right to receive a portion of the merger consideration multiplied by the number of shares of Common Stock covered by such RSU and, to the extent applicable, Earn-Out Consideration and indemnity escrow release payments, in cash and without interest, less required withholding taxes, in accordance with the terms of the Merger Agreement, subject to each RSU holder’s delivery to the surviving corporation of an equity award surrender agreement.
The Board of Directors of the Company (the “Board”) unanimously approved the Merger Agreement and the transactions contemplated therein, including the Merger.
The consummation of the Merger is subject to the satisfaction of certain closing conditions, including, but not limited to, (i)the representations and warranties of the parties being true and correct, except as permitted by the Merger Agreement, (ii)the parties’ performance in all material respects of their respective covenants and other obligations, and (iii)the expiration or termination of the applicable Hart-Scott-Rodino waiting period, the receipt of approvals from or expiration or termination of applicable waiting periods under Council Regulation (EC) No 139/2004 of 20January 2004, the receipt of approval from the Committee on Foreign Investment in the United States (“CFIUS”), and the receipt of certain other foreign regulatory approvals or expiration or termination of such applicable waiting periods. The Merger is not subject to a financing condition.
The Merger Agreement includes various representations, warranties and covenants of the parties customary for a transaction of this nature. All representations and warranties terminate as of the Effective Time and do not survive the Merger. Until the earlier of the termination of the Merger Agreement and the Effective Time, the Company has agreed, among other things, to operate its business in the ordinary course and has agreed to certain other operating covenants, as set forth more fully in the Merger Agreement.
The Company is subject to a “no-shop” restriction on its ability to solicit alternative acquisition proposals, and to provide information to and engage in discussions with third parties.
The Merger Agreement also provides that Parent will be required to pay the Company a termination fee of either (i) $150,000,000, in the event that Parent fails to consummate the closing when required to the terms of the Merger Agreement or if approvals under applicable antitrust laws of the United States or European Union are not obtained, or (ii) $25,000,000, in the event approval of CFIUS or approval under certain other applicable foreign antitrust laws is not obtained.
The foregoing description of the Merger Agreement and the transactions contemplated thereby does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Merger Agreement, which is filed as Exhibit 2.1 to this Current Report and is hereby incorporated by reference herein.
The Merger Agreement has been included to provide you with information regarding its terms. The Merger Agreement contains representations and warranties that the parties thereto made to the other parties thereto as of specific dates. The assertions embodied in those representations and warranties were made solely for purposes of the contract between the parties to the Merger Agreement and may be subject to important qualifications and limitations agreed by the parties in connection with negotiating the terms of the contract or contained in confidential schedules and exhibits not filed with this Current Report. In addition, some of those representations and warranties may not be accurate or complete as of any specified date, may be subject to a contractual standard of materiality different from those generally applicable to security holders or may have been used for the purpose of allocating risk among the parties rather than establishing matters as facts. For the foregoing reasons, the representations and warranties should not be relied upon as statements of factual information.
| Item 1.01 | Financial Statements and Exhibits. |
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Exhibit No. |
Description |
| 2.1* | Agreement and Plan of Merger, dated as of July26, 2018, among Aleris Corporation, Novelis Inc., Novelis Acquisitions LLC and OCM Opportunities ALS Holdings, L.P. |
| * | Schedules and exhibits have been omitted to Item 601(b)(2) of Regulation S-K. The Registrant hereby agrees to furnish supplementally copies of any of the omitted schedules and exhibits upon request by the Securities and Exchange Commission. |
Forward-Looking Statements
This Current Report contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements include statements regarding, among other things, the expected timing, completion and effects of the proposed transaction and all other statements in this report, other than historical facts, constitute forward-looking statements. In particular, no assurance can be given that the customary closing conditions will be fulfilled, that the customary regulatory approvals will be obtained, that the transaction will be completed on the anticipated schedule, or at all. Forward-looking statements involve known and unknown risks and uncertainties, which could cause actual results to differ materially from those contained in or implied by any forward-looking statement. Some of the important factors that could cause actual results to differ materially from those expressed or implied by forward-looking statements include, but are not limited to the factors discussed in the Company’s filings with the Securities and Exchange Commission, including the sections entitled “Risk Factors” contained therein. Readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether in response to new information, futures events or otherwise, except as otherwise required by law.
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
| ALERIS CORPORATION | ||
| Date: July27, 2018 | By: |
/s/ Eric M. Rychel |
| Name: | Eric M. Rychel | |
| Title: |
Executive Vice President, Chief Financial Officer and Treasurer |
EXHIBIT INDEX
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Exhibit No. |
Description |
| 2.1* | Agreement and Plan of Merger, dated as of July26, 2018, among Aleris Corporation, Novelis Inc., Novelis Acquisitions LLC and OCM Opportunities ALS Holdings, L.P. |
| * | Schedules and exhibits have been omitted Aleris Corp ExhibitEX-2.1 2 d589199dex21.htm EX-2.1 EX-2.1 Exhibit 2.1 EXECUTION VERSION AGREEMENT AND PLAN OF MERGER BY AND AMONG ALERIS CORPORATION,…To view the full exhibit click here
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