Exhibit 99.2

Recent Developments

Preliminary Financial Results for the Nine Months Ended December 31, 2019

Our condensed consolidated financial statements for the nine months ended December 31, 2019 are not yet available. The following expectations regarding our results for this period are preliminary, based solely upon management estimates based on currently available information, and subject to completion of financial and operating closing procedures as of and for the nine months ended December 31, 2019. As a result, our actual results may vary materially from the estimated preliminary results included herein and will not be publicly available until after the closing of this offering. Accordingly, you should not place undue reliance on these estimates. All of these estimates constitute “forward-looking statements” as described in “Special Note Regarding Forward-Looking Statements.” See “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included or incorporated by reference in this offering memorandum, for additional information regarding factors that could result in differences between the preliminary estimated ranges of certain financial results presented below and the financial results we will ultimately report as of and for the nine months ended December 31, 2019. The summary information below is not a comprehensive statement of our financial results for this period. In addition, the preliminary estimated ranges are those of Novelis and do not give pro forma effect to the Merger or reflect any other pro forma adjustments.

The preliminary financial data included in this offering memorandum has been prepared by, and is the responsibility of, Novelis’ management. PricewaterhouseCoopers LLP has not audited, reviewed, compiled, or applied agreed-upon procedures with respect to the preliminary financial data. Accordingly, PricewaterhouseCoopers LLP does not express an opinion or any other form of assurance with respect thereto.

Based on the preliminary work that we have completed to date, we expect that the following will be our results for the nine months ended December 31, 2019:

Adjusted EBITDA

We expect Adjusted EBITDA to be between $340 million and $345 million for the three months ended December 31, 2019, compared to $322 million for the three months ended December 31, 2018.

We expect Adjusted EBITDA to be between $1,086 million and $1,091 million for the nine months ended December 31, 2019, compared to $1,011 million for the nine months ended December 31, 2018.

The table below displays the reconciliation from “Net income attributable to our common shareholder” to the midpoint of “Adjusted EBITDA” for the three months ended December 31, 2019 and 2018 and the nine months ended December 31, 2019 and 2018 (in millions).

 

		Three Months Ended December 31,								Nine Months Ended December 31,
		2019				2018				2019				2018
Net income attributable to our common shareholder		$	107			$	78			$	357			$	331
Noncontrolling interest			-				-				-				-
Income tax provision			49				37				157				154
Depreciation and amortization			91				88				267				260
Interest expense and amortization of debt issuance costs			59				67				185				201
Adjustment to reconcile proportional consolidation			13				14				42				45
Unrealized (gains) losses on change in fair value of derivative instruments, net			(6	)			6				(15	)			9
Realized (gains) losses on derivative instruments not included in segment income			(1	)			-				2				(1	)
Restructuring and impairment, net			3				1				36				2
(Gain) loss on sale of fixed assets			1				2				(1	)			4
Metal price lag			11				13				18				(21	)
Business acquisition and other integration related costs			17				14				46				24
Other, net			(1	)			2				(5	)			3
Adjusted EBITDA		$	343			$	322			$	1,089			$	1,011

Shipments

We expect shipments to be approximately 797 kt for the three months ended December 31, 2019, compared to 800 kt for the three months ended December 31, 2018.

We expect shipments to be approximately 2,462 kt for the nine months ended December 31, 2019, compared to 2,497 kt for the nine months ended December 31, 2018.

Free Cash Flow

We expect Free Cash Flow to be between $39 million and $44 million for the three months ended December 31, 2019, compared to $23 million for the three months ended December 31, 2018.

We expect Free Cash Flow to be between $57 million and $62 million for the nine months ended December 31, 2019, compared to $127 million for the nine months ended December 31, 2018.

THE MERGER

On July 26, 2018, our Parent, Aleris, Novelis Acquisitions LLC, a Delaware limited liability company and an indirect, wholly owned subsidiary of Novelis, and OCM Opportunities ALS Holdings, L.P., a Delaware limited partnership, entered into the Merger Agreement, pursuant to which we expect to acquire Aleris, on the terms and subject to the conditions set forth therein. Aleris is a global leader in the manufacture and sale of aluminum rolled products, with 13 production facilities located throughout North America, Europe and China. Aleris’ product portfolio ranges from the most technically-demanding heat treated plate and sheet used in mission-critical applications to sheet produced through its low-cost continuous cast process. Aleris possesses a combination of technically-advanced, flexible and low-cost manufacturing operations supported by an industry-leading research and development platform. Its facilities are strategically located to serve customers globally. Aleris’ diversified customer base includes a number of industry-leading companies. We believe its technological and R&D capabilities allow it to produce the most technically demanding products, many of which require close collaboration and, in some cases, joint development with customers. Aleris had revenues of $3,452 million, Adjusted EBITDA of $368 million and shipments of 874 kt for the twelve months ended September 30, 2019.

By acquiring Aleris, we believe that Novelis will realize significant benefits including:

 

•

establishing a more diverse product portfolio, including aerospace, beverage can, automotive, building and construction, commercial transportation and specialty products;

 

•

integrating complementary assets in Asia to include recycling, casting, rolling and finishing capabilities and allowing Novelis to more efficiently serve the growing Asia market;

 

•

broadening Novelis’ automotive business to meet growing demand and diversifying its global footprint and customer base; and

 

•

strengthening our ability to compete against steel by gaining a greater platform for production, innovation and service.

The Merger is subject to the satisfaction of certain closing conditions, including, but not limited to the receipt of customary regulatory and antitrust approvals. As of the date hereof, the status of these regulatory and antitrust approvals is as follows:

U.S. Antitrust

On September 4, 2019, the U.S. Department of Justice (the “DOJ”) filed a civil antitrust lawsuit to block our proposed acquisition of Aleris. Contemporaneously with the lawsuit, the DOJ also announced an agreement with us to resolve the antitrust issues through binding arbitration. The agreement included a timetable and process for resolving the DOJ’s concerns and closing the transaction by the outside date under the Merger Agreement, January 21, 2020 (the “Outside Date”) (prior to completion of the arbitration). Depending on the outcome of the arbitration, we may be required to divest Aleris’ Lewisport, Kentucky manufacturing plant after closing our purchase of Aleris.

The unaudited pro forma condensed combined financial information set forth in this offering memorandum does not give effect to the potential disposition of Aleris’ Lewisport, Kentucky manufacturing plant. See “Offering Memorandum Summary— Summary Historical and Pro Forma Condensed Consolidated Financial Information of Novelis” and “Unaudited Pro Forma Condensed Combined Financial Information” included herein.

EU Antitrust

On October 1, 2019, the European Commission (the “EC”) announced its approval of our proposed acquisition of Aleris, conditioned on the divestiture of Aleris’ automotive plant in Duffel, Belgium (“Duffel”). The EC’s approval of the transaction is also subject to its approval of the proposed buyer of Duffel.

On November 22, 2019, Liberty House Group, the UK-based industrial conglomerate which is 100% owned by Mr. Sanjeev Gupta (“Liberty House”), signed a sale and purchase agreement for Duffel. The EC is currently reviewing our proposed counterparty. If the EC reaches a favorable view, it will approve Liberty House

 

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as a buyer of Duffel. We were informed by the EC on January 10, 2020 that it will require additional time to review the approval of our buyer and that its review is unlikely to be completed by the Outside Date.

The unaudited pro forma condensed combined financial information set forth in this offering memorandum does not give effect to the disposition of Duffel. See “Offering Memorandum Summary— Summary Historical and Pro Forma Condensed Consolidated Financial Information of Novelis” and “Unaudited Pro Forma Condensed Combined Financial Information” included herein.

China Antitrust

On December 20, 2019, the State Administration for Market Regulation in China (“SAMR”) announced its approval of our proposed acquisition of Aleris, conditioned on the divestiture of Duffel. SAMR’s approval of the transaction is also subject to its approval of the proposed buyer of Duffel, Liberty House.

CFIUS

On February 13, 2019, we received clearance from CFIUS in connection with our proposed acquisition of Aleris. CFIUS concluded that there are no unresolved national security issues with respect to the Merger.

Closing Date

As discussed above, we do not expect to receive approval of the proposed buyer of Duffel from the EC prior to the Outside Date. We remain committed to consummating the acquisition and will continue to work with Aleris and the EC to consummate the Merger. We are in discussions with Aleris regarding this matter and an extension of the Outside Date. However, there can be no assurance that we will receive approval of the proposed buyer of Duffel from the EC or otherwise consummate the acquisition at all or that Aleris will agree to an extension of the Outside Date or that the terms of any extension proposed by Aleris would be on terms favorable or agreeable to us. If the Merger is not completed on or before the Outside Date, in the absence of Novelis and Aleris agreeing to an extension of the Outside Date, it is possible that the Merger Agreement may be terminated. In addition, if the Merger Agreement is terminated, Novelis may be required to pay a break fee of $150 million under the Merger Agreement and may also incur additional costs and expenses in connection with any such termination that are not currently anticipated or subject us to adverse publicity, litigation or other claims. Such publicity, litigation or other claims may be material and may have a material impact on Novelis and its operations. Consummation of this offering is not contingent on completion of the Merger and investors should evaluate an investment in Novelis on both a standalone basis and after giving effect to the consummation. If for any reason the Merger is not consummated, we intend to use any remaining net proceeds from this offering for general corporate purposes. In addition, the Short Term Credit Agreement (as hereinafter defined) and $775 million incremental term loan commitments under our existing Term Loan Credit Agreement (as hereinafter defined) each terminate on the Outside Date (without giving effect to any extension) and will not be available to finance the Merger after the Outside Date without an extension. We intend to seek an extension or alternative financing arrangements but there can be no assurance that we will be able to obtain such an extension or replace such commitments or that even if an extension or replacement commitments can be obtained, the terms of such extension or commitments will not be more onerous or costly than the terms of our existing financing arrangements.

See “Risk Factors—Risks Related to the Merger.”

 

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SUMMARY HISTORICAL AND PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION OF NOVELIS

The following table presents our summary historical consolidated financial data as of and for the fiscal years ended March 31, 2019, 2018 and 2017. The summary historical consolidated financial data as of March 31, 2019 and 2018, and for the fiscal years ended March 31, 2019, 2018 and 2017, has been derived from our audited consolidated financial statements and accompanying notes contained in our Annual Report on Form 10-K for the fiscal year ended March 31, 2019, which is incorporated by reference into this offering memorandum.

Our summary historical consolidated financial data as of September 30, 2019 and for the six-month periods ended September 30, 2019 and 2018 has been derived from our historical unaudited interim condensed consolidated financial statements contained in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2019, which is incorporated by reference into this offering memorandum.

Our summary unaudited pro forma condensed combined financial information as of September 30, 2019 and for the last twelve months ended September 30, 2019 has been derived from the unaudited pro forma condensed combined financial information contained elsewhere in this offering memorandum. The unaudited pro forma condensed combined financial information has been adjusted to give effect to pro forma events that are (i) directly attributable to the Merger, (ii) factually supportable and (iii) with respect to the statements of operations, expected to have a continuing impact on the operating results of the combined company. See “Unaudited Pro Forma Condensed Combined Financial Information”.

The unaudited pro forma condensed combined financial information does not give effect to the disposition of Duffel or Lewisport. See “Offering Memorandum Summary—The Merger”. The disposition of Lewisport is not required to be given pro forma effect under Article 11 of Regulation S-X.

Results of interim periods are not necessarily indicative of the results expected for a full year or for future periods. The information set forth below is only a summary. You should read the following information together with our consolidated financial statements and accompanying notes and the sections entitled “Selected Financial Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in our Annual Report on Form 10-K for the fiscal year ended March 31, 2019 and our Quarterly Reports on Form 10-Q for the quarterly periods ended June 30, 2019 and September 30, 2019, which are incorporated by reference into this offering memorandum, and in our other reports filed with the SEC.

 

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The summary historical data presented below constitutes historical financial data of Novelis Inc. Our historical consolidated financial information may not be indicative of the future performance of Novelis Inc. or the combined company following consummation of the Merger. For more information, see “Where You Can Find More Information.”

 

		Year Ended March 31,												Six Months Ended September 30, (unaudited)								Pro Forma Twelve Months Ended September 30, (unaudited)
		2017				2018				2019				2018				2019				2019
		($ in millions, except as noted below)
Statement of Operations Data:
Net sales			9,591				11,462				12,326				6,233				5,776				15,321
Cost of goods sold (exclusive of depreciation and amortization shown below)			7,992				9,700				10,422				5,248				4,762				12,903
Selling, general and administrative expenses			396				466				502				244				249				678
Depreciation and amortization			360				354				350				172				176				478
Interest expense and amortization of debt issuance costs			294				255				268				134				126				366
Research and development expenses			58				64				72				32				37				94
Gain on assets held for sale			(2	)			--				--				--				--				--
(Gain) loss on sale of a business, net			27				(318	)			--				--				--				--
Loss on extinguishment of debt			134				--				--				--				--				--
Restructuring and impairment, net			10				34				2				1				33				39
Equity in net (income) loss of non-consolidated affiliates			8				1				(3	)			(1	)			--				(2	)
Business acquisition and other integration related costs			--				--				33				10				29				--
Other expenses, net			117				51				44				23				6				(14)
			9,394				10,607				11,690				5,863				5,418				14,542
Income before income taxes			197				855				636				370				358				779
Income tax provision			151				233				202				117				108				219
Net income			46				622				434				253				250				560
Statement of Cash Flows Data:
Net cash provided by (used in) operating activities			563				573				728				210				297				N/A
Net cash provided by (used in) investing activities			(200	)			96				(557	)			(343	)			(276	)			N/A
Net cash provided by (used in) financing activities			(325	)			(390	)			(118	)			61				(24	)			N/A
Effect of exchange rate changes on cash			--				47				(25	)			(19	)			(11	)			N/A
Other Financial and Operating Data:
EBITDA(1)			840				1,455				1,244				671				654				N/A
Adjusted EBITDA (1)(3)			1,085				1,215				1,368				689				746				1,794
Capital Expenditures			224				226				351				114				300				N/A
Free Cash Flow(2)			361				406				408				104				18				N/A
Balance Sheet Data (at period end):
Cash and cash equivalents			594				920				950				829				935				889
Total assets			8,373				9,515				9,563				9,701				9,577				13,105
Long-term debt (including current portion)			4,558				4,457				4,347				4,413				4,357				7,215
Short-term borrowings			294				49				39				147				14				14
Shareholder’s equity (deficit) of our common shareholder			(59	)			860				1,101				1,010				1,274				1,136

 

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(1)

EBITDA consists of earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA further adjusts EBITDA for unrealized (gains) losses on change in fair value of derivatives, except foreign currency remeasurement gains (losses), realized (gain) loss on derivative instruments not included in Adjusted EBITDA, proportional consolidation, (gain) loss on sale of fixed assets, net gain on assets held for sale, loss on extinguishment of debt, restructuring and impairment, net, metal price lag expense (income), loss (gain) on sale of business, business acquisition and other integration related costs and other costs, net. EBITDA and Adjusted EBITDA are measures commonly used in our industry, and we present EBITDA and Adjusted EBITDA to enhance your understanding of our operating performance. We believe that EBITDA and Adjusted EBITDA are operating performance measures that measure operating results unaffected by differences in capital structures, capital investment cycles and ages of related assets among otherwise comparable companies.

Management believes that investors’ understanding of our performance is enhanced by including these non-U.S. GAAP financial measures as a reasonable basis for comparing our ongoing results of operations. Many investors are interested in understanding the performance of our business by comparing our results from ongoing operations from one period to the next and would ordinarily add back items that are not part of normal day-to-day operations of our business. By providing these non-U.S. GAAP financial measures, together with reconciliations, we believe we are enhancing investors’ understanding of our business and our results of operations, as well as assisting investors in evaluating how well we are executing strategic initiatives.

However, EBITDA and Adjusted EBITDA are not measurements of financial performance under U.S. GAAP, and our EBITDA and Adjusted EBITDA may not be comparable to similarly titled measures of other companies. EBITDA and Adjusted EBITDA have important limitations as an analytical tool, and you should not consider them in isolation or as a substitute for analysis of our results as reported under U.S. GAAP. For example, EBITDA and Adjusted EBITDA:

 

•

do not reflect our cash expenditures or requirements for capital expenditures or capital commitments;

 

•

do not reflect changes in, or cash requirements for, our working capital needs; and

 

•

do not reflect any costs related to the current or future replacement of assets being depreciated and amortized.

We also use EBITDA and Adjusted EBITDA:

 

•

as measures of operating performance to assist us in comparing our operating performance on a consistent basis because it removes the impact of items not directly resulting from our core operations;

 

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for planning purposes, including the preparation of our internal annual operating budgets and financial projections;

 

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to evaluate the performance and effectiveness of our operational strategies; and

 

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to calculate incentive compensation payments for our key employees.

 

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The following table reconciles Net income (loss) attributable to our common shareholder to EBITDA and Adjusted EBITDA for the periods presented:

 

		Year Ended March 31,												Six Months Ended September 30, (unaudited)
		2017				2018				2019				2018				2019
		($ in millions, except as noted below)
Net income attributable to our common shareholder			45				635				434				253				250
Noncontrolling interests			1				(13	)			--				--				--
Income tax provision			151				233				202				117				108
Interest, net			283				246				258				129				120
Depreciation and amortization			360				354				350				172				176
EBITDA			840				1,455				1,244				671				654
Unrealized (gain) loss on derivatives(A)			(5	)			(20	)			10				3				(9	)
Realized (gain) loss on derivative instruments not included in Adjusted EBITDA			(5	)			--				(2	)			(1	)			3
Proportional consolidation(B)			28				51				58				31				29
(Gain) loss on sale of fixed assets, net			6				7				6				2				(2	)
Gain on assets held for sale			(2	)			--				--				--				--
Loss on extinguishment of debt			134				--				--				--				--
Restructuring and impairment, net(C)			10				34				2				1				33
Metal price lag expense (income)			31				(4	)			4				(34	)			7
Loss (gain) on sale of business			27				(318	)			--				--				--
Business acquisition and other integration related costs			--				--				33				10				29
Other costs, net			21				10				13				6				2
Adjusted EBITDA			1,085				1,215				1,368				689				746

 

(A)

Unrealized (losses) gain on the derivative instruments not included in Adjusted EBITDA represent the mark-to-market accounting for changes in the fair value of our derivatives that do not receive hedge accounting treatment.

 

(B)

Under U.S. GAAP, entities in which we have 20% to 50% ownership are generally accounted for using the equity method of accounting. However, our Adjusted EBITDA for each of our business segments includes the results of these non-consolidated affiliates on a proportionally consolidated basis, which is consistent with how we manage our business. Accordingly, in calculating Adjusted EBITDA, we add back the results of our non-consolidated affiliates on a proportionally consolidated basis, net of our share of their net after-tax results, which are already included in our operating results.

 

(C)

See Note 2 to our audited consolidated financial statements incorporated by reference herein.

 

(2)

Free Cash Flow consists of: (a) net cash provided by (used in) operating activities; (b) plus net cash provided by (used in) investing activities, (c) plus cash used in the acquisition of assets under a capital lease and (d) less proceeds from sales of assets, net of transaction fees, cash income taxes and hedging. We believe that Free Cash Flow is relevant to investors as it provides a measure of the cash generated internally that is available for debt service and other value creation opportunities. However, Free Cash Flow is not a measurement of financial performance or liquidity under U.S. GAAP and does not necessarily represent cash available for discretionary activities, as certain debt service obligations must be funded out of Free Cash Flow. In addition, our method of calculating Free Cash Flow may not be consistent with that of other companies.

The following table reconciles Net cash provided by (used in) operating activities to Free Cash Flow for the periods presented:

 

		Year Ended March 31,												Six Months Ended September 30, (unaudited)
		2017				2018				2019				2018				2019
		($ in millions, except as noted below)
Net cash provided by operating activities			563				573				728				210				297
Net cash (used in) provided by investing activities			(200	)			96				(557	)			(343	)			(276	)
Plus: Cash used in the acquisition of assets under a capital lease (A)			--				--				239				239				--
Less: Proceeds from sales of assets and business, net of transactions fees, cash income taxes and hedging (B)			(2	)			(263	)			(2	)			(2	)			(3	)
Free Cash Flow			361				406				408				104				18

 

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(A)

This line item includes $239 million of outflows related to the acquisition of operating assets that we historically leased at our Sierre, Switzerland rolling facility during the year ended March 31, 2019. The impact is recognized as “Acquisition of assets under a capital lease.”

 

(B)

This line item includes the proceeds from the sale of shares in Ulsan Aluminum Ltd., to Kobe during the year ended March 31, 2018 in the amount of $314 million, net of $42 million and $11 million, in cash taxes and transaction fees paid, respectively. This line item also includes “Outflows from the sale of a business, net of transaction fees” which is comprised of cash of $13 million held by ALCOM, which was a consolidated entity sold during fiscal 2017.

 

(3)

Pro Forma Adjusted EBITDA consists of net income attributable to our common shareholder adjusted for noncontrolling interests, income tax provision, depreciation and amortization, interest expense and amortization of debt issuance costs, adjustment to reconcile proportional consolidation, adjustment for inventory, unrealized losses (gains) on change in fair value of derivative instruments, net, realized gains on derivative instruments not included in segment income, gain on assets held for sale, loss on extinguishment of debt, restructuring and impairment, net, loss on sale of fixed assets, (gain) loss on sale of a business, metal price lag, business acquisition and other integration related costs, start up costs, stock based compensation expense, unallocated currency exchange losses on debt and other costs, net.

The following table reconciles Net income attributable to our common shareholder to Pro Forma Adjusted EBITDA for twelve months ended September 30, 2019:

 

		Twelve Months Ended September 30, 2019
		Novelis				Aleris				Combined Novelis / Aleris				Pro Forma Adjustments				Combined Pro Forma Adjusted EBITDA
		($ in millions, except as noted below)
Net income attributable to our common shareholder			431				(7	)			424				136				560
Noncontrolling interests			-				0				0								0
Income tax provision			193				28				221				(2	)			219
Depreciation and amortization			354				141				495				(17	)			478
Interest expense and amortization of debt issuance costs			260				158				418				(52	)			366
Adjustment to reconcile proportional consolidation			56				-				56								56
Adjustment for inventory			-				-				-								-
Unrealized losses (gains) on change in fair value of derivative instruments, net			(2	)			4				2								2
Realized gains on derivative instruments not included in Adjusted EBITDA			2				-				2								2
Gain on assets held for sale			-				-				-								-
Loss on extinguishment of debt			-				-				-								-
Restructuring and impairment, net			34				5				39								39
Loss on sale of fixed assets			2				-				2								2
(Gain) loss on sale of a business			-				-				-								-
Metal price lag			45				(7	)			38								38
Business acquisition and other integration related costs			52				-				52				(52	)			-
Start Up costs			-				13				13								13
Stock based compensation expense			-				12				12								12
Unallocated currency exchange losses on debt			-				1				1								1
Other, net			(2	)			21				19				(13	)			6
Adjusted EBITDA			1,425				368				1,794				0				1,794

 

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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

The following unaudited pro forma condensed combined financial information is based upon the audited and unaudited historical financial information of Novelis Inc. (“Novelis” or “the Company”) and Aleris Corporation (“Aleris” or “Target”) and presents the pro forma effects of the following transactions (the “Transactions”):

The Merger. On July 26, 2018, Novelis, Aleris, Novelis Acquisitions LLC, an indirect wholly owned subsidiary of the Company (“Merger Sub”), and OCM Opportunities ALS Holdings, L.P., entered into an Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which Merger Sub shall be merged with and into the Target, 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 Target 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 Limited Liability Company Act of the State of Delaware. Per the Merger Agreement, Novelis will pay Aleris a base consideration of $775 million for all outstanding common stock as of the closing date which included approximately 2,713,385 shares related to the Exchange Notes and the settlement of stock options and restricted stock units that vest upon a change-in-control. In addition, the purchase consideration also includes up to $50 million which is contingent on Aleris achieving certain established financial metrics for the North America segment over 2018-2020.

The European Commission announced its approval of the Merger upon the condition of the divestiture of Aleris’ Duffel facility in Duffel, Belgium. The State Administration for Market Regulation (“SAMR”) in China also announced the approval of our proposed Merger of Aleris, condition on the divestiture of Duffel. SAMR’s approval of the Merger is also subject to its approval of the proposed buyer of Duffel, Liberty House. In addition, our pending arbitration with the U.S. Department of Justice may require us to divest the Aleris’ Lewisport, Kentucky manufacturing plant. However, the unaudited pro forma condensed combined financial information does not give effect to the divestiture of the Duffel plant or Aleris’ Lewisport, Kentucky manufacturing plant. The disposition of Lewisport is not required to be included in pro forma financial statements under Article 11 of Regulation S-X. The purchase consideration for the Merger will be funded through a combination of (i) cash held by Novelis, (ii) new debt financing, (iii) drawing upon Novelis’ existing ABL Revolver (as defined below), (iv) drawings under the $1.5 billion Short Term Credit Agreement (as defined below) if the agreement is in place at the Effective Time and (v) up to $775 million of incremental term loans under Novelis’ existing floating rate Term Loan Facility (as defined below), if commitments for such incremental term loans remain effective at the Effective Time. In conjunction with the Merger, Novelis intends to pay off certain Aleris existing debt consisting of (i) First Lien Term Loan, (ii) Senior Secured Junior Priority Notes, and (iii) ABL Facility, which is included in purchase consideration and estimated at $1,817 million based on the amounts of Aleris debt reflected as outstanding on the Aleris balance sheet as of September 30, 2019. Aleris’ Zhenjiang Term Loan in the amount of $146 million as of September 30, 2019 will remain outstanding after the Merger. As discussed elsewhere in this offering memorandum, we do not expect to consummate the Merger by the Outside Date, and the commitments in respect of the Short Term Credit Agreement (as herein after defined) and $775 million incremental term loans under our existing Term Loan Credit Agreement (as hereinafter defined) will each terminate on the Outside Date (without giving effect to any extension) and will not be able to finance the Merger after the Outside Date without an extension. We intend to seek an extension or alternative financing arrangements but there can be no assurance that we will be able to obtain such an extension or replace such commitments or that even if an extension or replacement commitments can be obtained, the terms of such extension or commitments will not be more onerous or costly than the terms of our existing financing arrangements. See “Offering Memorandum Summary—The Merger.”

Debt Financing. Novelis anticipates issuing $1,600 million of notes offered hereby, of which $1,150 million will be utilized for repayment of the Existing 2024 Notes; transaction fees and expenses; redemption premium and accrued interest; and $342 million for general corporate expenses and the Merger.

The sum of the components may not equal the total due to rounding.

 

9

Unaudited Pro Forma Condensed Combined Balance Sheet

As of September 30, 2019

(in millions)

 

		Historical as of September 30, 2019
		Novelis				Aleris				Pro Forma Reclassification   Adjustments								Pro Forma Merger Adjustments								Pro Forma Effects of Debt Financing								Pro Forma Condensed Combined
ASSETS
Current assets
Cash and cash equivalents		$	935			$	45			$	-							$	(2,688	)			6(a)			$	2,598				6(a)			$	889
Accounts receivable, net
— third parties			1,329				396				-								-								-								1,725
— related parties			159				-				-								-								-								159
Inventories			1,454				752				-								150				6(b)				-								2,357
Prepaid expenses and other current assets			122				58				(9	)			5(a)				-								-								172
Fair value of derivative instruments			101				-				9				5(a)				-								-								110
Assets held for sale			5				-				-								-								-								5
Total current assets		$	4,105			$	1,251			$	-							$	(2,538	)						$	2,598							$	5,416
Property, plant and equipment, net			3,435				1,328				18				5(b); 5(c)				(13	)			6(b)				-								4,768
Goodwill			607				-				3				5(d)				522				6(b)				-								1,132
Intangible assets, net			323				31				5				5(b)				284				6(b)				-								643
Investment in and advances to non–consolidated affiliates			768				-				-								-								-								768
Deferred income tax assets			136				60				-								(60	)			6(f)				-								136
Other long–term assets			203				73				(27	)			5(c); 5(d)				-								(8	)			6(c)				242
Total assets		$	9,577			$	2,743			$	-							$	(1,806	)						$	2,591							$	13,105
LIABILITIES AND SHAREHOLDER’S EQUITY
Current liabilities
Current portion of long–term debt		$	19			$	73			$	4				5(c)			$	(66	)			6(c)			$	8				6(c)			$	38
Short–term borrowings			14				-				-								-								-								14
Accounts payable
— third parties			1,827				303				-								-								-								2,130
— related parties			202				-				-								-								-								202
Fair value of derivative instruments			102				-				7				5(a)				-								-								109
Accrued expenses and other current liabilities			532				192				(11	)			5(a); 5(c)				15				6(d); 6(i)				(32	)			6(d)				695
Total current liabilities		$	2,696			$	567			$	-							$	(51	)						$	(24	)						$	3,188
Long–term debt, net of current portion			4,338				1,887				19				5(c)				(1,748	)			6(c)				2,681				6(c)				7,177
Deferred income tax liabilities			248				9				-								37				6(f)				-								293
Accrued pension benefits			-				156				-								-								-								156
Accrued postretirement benefits			811				29				-								-								-								840
Other long–term liabilities			242				72				(19	)			5(c)				-								-								294
Deferred revenue			-				55				-								(3	)			6(g)				-								52
Total liabilities		$	8,335			$	2,773			$	-							$	(1,765	)						$	2,657							$	12,001
Shareholder’s equity
Common stock, no par value; unlimited number of shares authorized; 1,000 shares issued and outstanding		$	-			$	-			$	-							$	-				6(e)			$	-							$	-
Additional paid–in capital			1,404				437				-								(437	)			6(e)				-								1,404
Retained earnings (accumulated deficit)			453				(276	)			-								205				6(e)				(66	)			6(h)				315
Accumulated other comprehensive loss			(583	)			(192	)			-								192				6(e)				-								(583	)
Total equity of our common shareholder		$	1,274			$	(30	)		$	-							$	(41	)						$	(66	)						$	1,136
Noncontrolling interests			(32	)			-				-								-								-								(32	)
Total equity		$	1,242			$	(30	)		$	-							$	(41	)						$	(66	)						$	1,104
Total liabilities and equity		$	9,577			$	2,743			$	-							$	(1,806	)						$	2,591							$	13,105

 

10

Unaudited Pro Forma Condensed Combined Statement of Operations

For the Twelve Months Ended March 31, 2019

(in millions)

 

		Historical for the Twelve Months Ended March 31, 2019
		Novelis				Aleris				Pro Forma Reclassification Adjustments												Pro Forma Merger Adjustments								Pro Forma Effects of Debt   Financing								Pro Forma Condensed Combined
Net Sales		$	12,326			$	3,521			$	-											$	-							$	-							$	15,847
Cost of goods sold (exclusive of depreciation and amortization for Novelis)			10,422				3,220				(128	)			5(e)								-								-								13,514
Selling, general and administrative expenses			502				215				(45	)			5(f); 5(g); 5(h)								-								-								672
Gains on derivative financial instruments			-				(6	)			6				5(i)								-								-								-
Depreciation and amortization			350				-				138				5(e); 5(f)								(13	)			7(a)				-								475
Interest expense and amortization of debt issuance costs			268				150				-												(139	)			7(b)				94				7(b)				372
Research and development expenses			72				-				19				5(g)								-								-								91
Restructuring and impairment, net			2				5				-												-								-								7
Loss on extinguishment of debt			-				49				-												-								-								49
Equity in net (income) loss of non-consolidated affiliates			(3	)			-				-												-								-								(3)
Business acquisition and other integration related costs			33				-				16				5(h)								(49	)			7(c)				-								-
Other expense (income), net			44				(7	)			(6	)			5(i)								-								-								30
		$	11,690			$	3,626			$	-											$	(202	)						$	94							$	15,207
Income (loss) before income taxes			636				(105	)			-												202								(94	)							639
Income tax provision			(202	)			(25	)			-												1				7(d)				2				7(d)				(223)
Net income (loss)		$	434			$	(130	)		$	-											$	203							$	(90	)						$	416
Net income attributable to noncontrolling interests			-				-				-												-								-								-
Net income (loss) attributable to our common shareholder		$	434			$	(130	)		$	-											$	203							$	(90	)						$	416

 

11

Unaudited Pro Forma Condensed Combined Statement of Operations

For the Six Months Ended September 30, 2019

(in millions)

 

		Historical for the Six Months Ended September 30, 2019
		Novelis				Aleris				Pro Forma Reclassification Adjustments								Pro Forma Merger Adjustments								Pro Forma Effects of Debt         Financing						Pro Forma Condensed Combined
Net Sales		$	5,776			$	1,774			$	-							$	-							$	-					$	7,550
Cost of goods sold (exclusive of depreciation and amortization for Novelis)			4,762				1,550				(64	)			5(e)				-								-						6,248
Selling, general and administrative expenses			249				104				(21	)			5(f); 5(g); 5(h)				-								-						331
Gains on derivative financial instruments			-				(25	)			25				5(i)				-								-						-
Depreciation and amortization			176				-				68				5(e); 5(f)				(7	)			7(a)				-						237
Interest expense and amortization of debt issuance costs			126				80				-								(73	)			7(b)				47			7(b)			179
Research and development expenses			37				-				9				5(g)				-								-						46
Restructuring and impairment, net			33				1				-								-								-						34
Gain on assets held for sale			-				-				-								-								-						-
Loss on extinguishment of debt			-				-				-								-								-						-
Equity in net (income) loss of non-consolidated affiliates			-				-				-								-								-						-
Business acquisition and other integration related costs			29				-				9				5(h)				(38	)			7(c)				-						-
Other expense (income), net			6				2				(25	)			5(i)				-								-						(17	)
		$	5,418			$	1,712			$	-							$	(118	)						$	47					$	7,059
Income before income taxes			358				62				-								118								(47	)					491
Income tax provision			(108	)			(12	)			-								(1	)			7(d)				1			7(d)			(120	)
Net income		$	250			$	50			$	-							$	117							$	(46	)				$	371
Net income attributable to noncontrolling interests			-				-				-								-								-						-
Net income attributable to our common shareholder		$	250			$	50			$	-							$	117							$	(46	)				$	371

 

12