Rio Tinto offloads Alcan division for $1.2 billion

[July 06, 2009]  SYDNEY (AP) -- Rio Tinto has sold a division of its Alcan unit for $1.2 billion as it continues to reduce debt, the Anglo-Australian miner said in a statement Monday.

The deal to sell its Alcan Packaging Food Americas division to U.S.-based Bemis Company Inc. is subject to regulatory approvals and $200 million of the total price may be in the form of Bemis shares.

The move is the latest by Rio to reduce its debt, which is about $23.9 billion after raising fresh capital last week through a share issue. Rio incurred significant debt in its 2007 purchase of Canadian aluminum giant Alcan Inc. for $38 billion.

"The sale of the Food Americas division is the first significant step in reducing the asset portfolio acquired with Alcan," said Guy Elliott, Rio Tinto's chief financial officer. "The transaction represents solid value given the challenging financial environment."

So far in 2009, Rio Tinto has announced a total of $3.7 billion of asset sales, including its interest in an aluminum smelter in China, Brazilian iron ore operations and a coal mine in the United States.

Monday's statement said the company has identified Alcan's packaging and engineered products divisions as candidates for sale.

Rio Tinto shares closed 2.2 percent lower at $48.50 Australian dollars in Sydney.

[Associated Press]

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