Alcan Spins Off its Aluminum Rolled Products Business

On January 6, 2005, Alcan Inc. distributed to its shareholders substantially all of the aluminum rolled products businesses it carried on prior to its 2003 acquisition of Pechiney, together with some of its alumina and primary metal-related businesses in Brazil and four former Pechiney rolling facilities in Europe. The transaction evolved from the strategic alternatives available to Alcan following its acquisition of Pechiney. The distribution was accomplished through a shareholder approved, court sanctioned plan of arrangement, and structured to be tax efficient at the Alcan corporate level and tax neutral to Alcan shareholders in Canada (qualifying as a tax-deferred “butterfly” reorganization under paragraph 55(3)(b) of the Income Tax Act (Canada)) and in the US (intended to qualify as a “tax-free” transaction under section 355 of the Internal Revenue Code (United States). On the date of distribution, Alcan shareholders of record received one common share of Novelis Inc., the company created to independently carry on the businesses spun-off by Alcan, for every five common shares of Alcan held. The Novelis common shares trade on the Toronto Stock Exchange and the New York Stock Exchange, with a total market capitalization of approximately US$1.8 billion on February 17, 2005.

During the planning stages, Alcan, together with its financial advisors, determined an appropriate capital structure for Novelis on a stand-alone basis. Concurrently with the spin-off, US$2.9 billion in new financing was raised, comprised of seven-year senior secured variable interest rate term loans of US$1.3 billion, US$1.4 billion of 7 1/4 per cent senior notes due 2015, four three-year floating rate term loans in aggregate of US$181 million and a one-year floating rate term loan of US$19 million. In addition, Novelis was provided with access to a US$500 million revolving credit facility. The senior secured loans were advanced by, and the revolving credit facility made available by, a syndicate of banks led by Citigroup North America, Inc., as administrative agent and collateral agent, and Morgan Stanley Senior Funding, Inc. and UBS Securities LLC, as co-syndication agents. The senior notes, together with registration rights, were privately placed with institutional investors in the US and Canada. The private placement was managed by Citigroup Global Markets Inc., Morgan Stanley & Co. Inc. and UBS Securities LLC, as joint book-running managers and representatives of the initial purchasers of the senior notes.

The transactions comprised a number of elements that spanned the period from November 2003 to January 2005, including strategy and alternatives development, corporate governance, competition regulatory compliance, tax planning, asset reorganization and separation, the plan of arrangement court and shareholder approval processes, securities regulatory compliance, stock exchange listings, the inter-company commercial arrangements process, the financial and non-financial disclosure process and the financing. All aspects of the transaction were directed from Alcan’s head office in Montreal and led by David McAusland, executive vice-president, corporate development and chief legal officer. David McAusland’s legal team, which was responsible for planning and implementation of the transaction, as well as the coordination of the efforts of project team personnel in finance, treasury, financial reporting, information technology, human resources, shareholder communications and the business units, was comprised of Pierre Chenard, deputy chief legal officer; Roy Millington, corporate secretary; and Josiane Turcotte, Julie Parent and Marie-Christine Dupont, legal counsel. Michael O’Connor, chief tax officer, and Hugh Berwick, senior tax counsel, led the tax structure and planning aspects of the transaction.

In addition to the attorneys at the head office, in-house counsel in the various jurisdictions where assets or operations to be spun-off were located or where security for the financings was to be granted became involved at various stages, including Charles Aley, Gordon Becker, Mathieu Bergeron, Dan Hughes and Donald Seberger (US), Kate Anthony-Wilkinson and Richard Walker (UK), Edouard de Vienne, Jerôme Gaschet, Jan Holtzhausser and Vanessa Jaeger (France), Cécile Lenglos-Le Corre (France, Luxembourg), Nikolaus von Verschuer and Sabine Trautwein (Germany), Peter Ith and Michael Stanek (Switzerland) and Mario Brigido (Brazil).

Alcan’s lead outside counsel for the transactions consisted of Ogilvy Renault LLP and Sullivan & Cromwell LLP. Within the firms, overall coordination for the transaction was the responsibility of Norman Steinberg and Andrew Bleau at Ogilvy Renault, and Scott Miller, Peter Wiazowski and Sarah Payne at Sullivan & Cromwell.

The Ogilvy Renault team from Montreal, Toronto and Vancouver consisted of Andrew Bleau and Niko Veilleux (corporate, cross-border securities and financing), Steve Malas and Nicolas Labrecque (corporate reorganization, aggregation transactions and financing), Françoise Denault and Ella Plotkin (commercial arrangements), Adrienne Oliver, John Leopardi, Paul Carenza and Jules Charette (tax), Norm Steinberg, Ruth Wahl and Karen Galpern (corporate governance and stakeholder rights), Thierry Dorval and Christine Dubé (securities and shareholder solicitation), Louise Laplante, Martin Rochette and Julie Paquet (employment and pensions), Sophie Melchers and Jean Bertrand (plan of arrangement, litigation), Jane Bogaty, Mary Kelly, George Maughan and Warren Brazier (financing and canadian security package), Richard King (environment and energy) and Daniel Paul (information technology). Assisting were Éric Gélinas and Catherine Nicholson (tax), Nathalie Proulx (corporate reorganization), Marianne Plamondon and Tom Hesler (securities), Rhonda Levy (research), Sophie Kilburn and Georgina Hunter (translation), Renée Thériault (conflict resolution arrangements), Frank Picciola (M&A) and Dany Assaf (competition regulatory).

The Sullivan & Cromwell team from New York and Palo Alto included Scott Miller, Sarah Payne, Peter Wiazowski, Olivier Karsenti, Xiaodong Yi, Michael Davidian, Adam McAnaney, Bruno Salama, Hubert Ployart and Carlotta D’Ercole (corporate, securities and financing), Willard Taylor, Jeffrey Hochberg, Ansgar Simon, Martin Hamilton and Joshua Mandell (tax) and Stuart Meiklejohn and Steven Holley (antitrust). Also involved from the European Sullivan & Cromwell offices were Konstantin Technau, Max Birke and Philipp Semmer in Frankfurt, Benjamin Perry in London, and Richard Vilanova, Olivier de Vilmorin and Eric Laut in Paris.

The Ernst & Young LLP team was led by Steven Surdell in the US, and Eric Bretsen, Angelo Nikolakakis, Roger Ashton and Allan Lanthier in Canada. Jeremy Forgie at Blake, Cassels & Graydon LLP in Toronto assisted Alcan with certain additional US and Canadian tax matters.

A number of other law firms provided specific local counsel to Alcan. European competition matters were addressed by Andrew Renshaw, Matthew O’Regan, Jason Gudofsky and Gavin Bushell of Freshfields Bruckhaus Deringer in Belgium. Providing assistance on the asset reorganization and financing security fronts were Michael Greene, James Dudley, Dominic Conlon and David Ridgway from A&L Goodbody in Ireland; Julian Howard, Jatinder Bains and William Sykes of Macfarlanes in the UK; Daniel Daeniker, Micha Fankhauser, Thiemo Sturny and Daniel Haeberli of Homburger Rechtsanwälte in Switzerland; Sebastian Bock, Holger Alfes, Martina Bauer and Florian Becker of Nörr Stiefenhofer Lutz in Germany; Catherine Dessoy of Elvinger, Dessoy, Dennewald in Luxembourg; Paul Soens of Van Olmen & Wynant in Belgium; Matteo Zapelli of Ernst & Young in Italy; Luiz Assis, Paulo Vaz, Ana Monguilod, Daniel Castro, Raquel McKenney, Daniel Pessoa and Beatriz Moraes of Levy & Salomão Advogados in Brazil; David Waltenberg of Advocacia Waltenberg in Brazil; Phua Pao Yii of Skrine in Malaysia; Kang-Seok Jeon of Kim & Chang in Korea; and Sally Crawford of Jones Day in Dallas.

Weil, Gotshal & Manges LLP and Davies Ward Phillips & Vineberg LLP were counsel for the syndicate of banks in the credit financing and for the initial purchasers in the senior notes financing. The Weil Gotshal team was led by David Lefkowitz (corporate, securities, finance) and Daniel Dokos (finance), assisted by Jonathan Bayer, Temi Ofuya, Randi Harari and Michael Bonafede (corporate, securities), Soo-Jin Shim, Danek Freeman, Lester Szeto, Justin Levy and Junine Johnson (finance), Annemargaret Connolly and John O’Loughlin (environmental), David Bower, Helyn Goldstein, Mary Jean Potenzone, Michael Kam, Anna Grant and Chayim Neubort (ERISA, tax) and Lianne Pinchuk (litigation). The Davies team was led by Patricia Olasker (corporate/securities) and consisted of, in Toronto, Kenneth Klassen and Gregory Harnish (corporate/securities), Nicholas Leblovic, Scott Hyman and Melanie Koszegi (banking and finance), John Zinn and Geoffrey Turner (tax), Alexandria Pike (environmental) and Don Stanbury (commercial real estate). The Davies team in Montreal consisted of Maryse Bertrand and Olivier Désilets (corporate/securities) and Alain Roberge (banking and finance).