Kaiser Aluminum Corporation today announced the closing of its private placement of $175 million aggregate principal amount of 4.5% Cash Convertible Senior Notes due 2015 (the "notes"). The $175 million aggregate principal amount of the notes includes $25 million of notes sold pursuant to the initial purchasers' exercise of their overallotment option.

The notes will pay interest semiannually at a rate of 4.5% per annum. In certain circumstances, the notes may be converted into an amount of cash based on the market value at that time of Kaiser Aluminum's common stock and a conversion rate initially equal to 20.6949 shares of Kaiser Aluminum's common stock per $1,000 principal amount of the notes (which is equal to a conversion price of approximately $48.32 per share, representing a 26% conversion premium over the closing price of $38.35 per share on March 23, 2010). The notes are not convertible into Kaiser Aluminum's common stock or into any other securities.

In connection with the offering of the notes, Kaiser Aluminum repurchased approximately $44.2 million of its outstanding common stock in privately negotiated, off-market transactions with purchasers of the notes, which were effected through one of the initial purchasers of the notes, and entered into convertible note hedge transactions with affiliates of the initial purchasers (the "option counterparties"). The convertible note hedge transactions are expected to generally reduce Kaiser Aluminum's exposure to potential cash payments in excess of the principal amount of the notes that it may be required to make upon the conversion of the notes. Kaiser Aluminum has also entered into warrant transactions with the option counterparties pursuant to which Kaiser Aluminum sold to the option counterparties net-share-settled warrants to purchase shares of Kaiser Aluminum's common stock. To the extent that the market value of Kaiser Aluminum's common stock on the applicable valuation dates exceeds the strike price of the warrants, which represents a 60% premium over the closing price per share of Kaiser Aluminum's common stock on March 23, 2010, the warrants will have a dilutive effect.

In connection with hedging the convertible note hedge transactions and the warrant transactions, the option counterparties and/or their affiliates entered into various derivative transactions with respect to Kaiser Aluminum's common stock concurrently with or shortly after the pricing of the notes. These activities and the repurchase of common stock by Kaiser Aluminum could have increased (or reduced the size of any decrease in) the price of Kaiser Aluminum's common stock concurrently with or shortly after the pricing of the notes. In addition, the option counterparties and/or their affiliates expect to modify their hedge positions from time to time by entering into, or unwinding, various derivative transactions and/or by purchasing, or selling, shares of Kaiser Aluminum's common stock in secondary market transactions, and are particularly likely to do so following the conversion of a note or shortly before the maturity date of the notes. Although the effect of these activities on the price of Kaiser Aluminum's common stock will depend in part on various market conditions and cannot be ascertained at this time, the effect could be to depress (or to avoid an increase) in the price of Kaiser Aluminum's common stock.

The offering generated net proceeds of approximately $166.5 million, after deducting the initial purchasers' discounts and estimated fees and expenses.

Kaiser Aluminum used approximately $17.1 million of the net proceeds from the offering of the notes to pay the costs of the convertible note hedge transactions (after such costs were partially offset by the proceeds that Kaiser Aluminum received from the warrant transactions) and approximately $44.2 million of the net proceeds to repurchase its common stock. The remainder of the net proceeds will be used for general corporate purposes.