Alcoa Inc. (NYSE: AA) is raising new capital to help the company pay for its previously announced acquisition of the Firth Rixson business and to pay related fees and expenses.

The aluminum giant is selling 25,000,000 of its depositary shares. Each depositary share represents a 1/10th interest in a share of Alcoa’s Class B Mandatory Convertible Preferred Stock, Series 1, par value $1.00 per share, $500 liquidation preference per share of mandatory convertible preferred stock (equivalent to $50 per depositary share).

Morgan Stanley and Credit Suisse are listed as the joint book-running managers of this offering. If the underwriters exercise their overallotment option in full, there will be an additional 3.75 million depository shares sold, making the full offering 28.75 million shares.

While the use of proceeds has already been designated, Alcoa did say that the completion of this offering is not contingent on the completion of the acquisition. Note that Alcoa’s filing for the offering talks about additional debt financing for the Firth Rixson acquisition, as follows:

In addition to this offering, we expect to obtain additional financing for the Acquisition and related fees and expenses. … senior debt securities in one or more series. If the Acquisition is not completed, the debt issued by us in the proposed Debt Offering will be redeemed. We expect the remainder of the funds for the Acquisition to come from the proposed Debt Offering, if completed, or we may also borrow under the Bridge Facility or our revolving credit facilities or issue commercial paper …

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A further description of the depository shares is as follows:

The Depositary Shares entitle the holders, through the depositary, to a proportional fractional interest in the rights and preferences of the shares of the Mandatory Convertible Preferred Stock underlying the Depositary Shares, including conversion, dividend, liquidation and any voting rights, subject to certain limited exceptions. Unless converted earlier at the option of the holders or redeemed earlier at Alcoa’s option, each share of Mandatory Convertible Preferred Stock will convert automatically into a variable number of shares of Alcoa’s common stock on October 1, 2017. The conversion rate will be determined by the price of Alcoa’s common shares on that date. The dividend rate and the conversion terms of the Mandatory Convertible Preferred Stock will be determined by negotiations between Alcoa and the underwriters.

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