7 Jul 2009

Rio sells off Food Americas division for $1.2 billion

10:10 am on 7 July 2009

Mining giant Rio Tinto Ltd has taken another step in its debt reduction programme, offloading a division of Alcan for $US1.2 billion.

In the first major sale of an asset gained via its controversial acquisition of the alumina giant in 2007, Rio Tinto will sell the Alcan Packaging Food Americas division to Bemis Company for the $US1.2 billion.

The price, which may include $US200 million of shares in Bemis, was deemed "solid value" by Guy Elliott, Rio Tinto's chief financial officer, given the challenging financial environment.

Rio Tinto was burdened with debt after buying the Canadian Alcan for $US38 billion near the height of the commodity boom and had pledged to slash $US10 billion off debt in 2009.

It is well ahead of target after last week completing a $US15.2 billion capital raising as part of the aggressive debt-reduction strategy.

Rio Tinto is also expecting a $US5.8 billion equalising payment from BHP Billiton upon completion of a planned joint venture covering their neighbouring West Australian iron ore operations.