Rio sells American food packaging assets for $1.2 billion

By Denny Thomas

SYDNEY (Reuters) - Global miner Rio Tinto further improved its cash position on Monday by agreeing to sell its Americas food packaging business for $1.2 billion, and analysts said they expected more asset sales to follow soon.

Rio Tinto, which only last week raised $15.2 billion in one of the world's largest-ever rights issues, will sell the assets to U.S.-based Bemis Co Inc for $1 billion in cash, with the rest potentially paid in the form of Bemis shares.

The deal moves Rio Tinto closer to the day when it can draw a line under its near-disastrous 2007 acquisition of aluminum and packaging firm Alcan. Bought near the height of the commodities boom, Alcan left Rio Tinto with $38 billion in debt.

Rio Tinto had hoped to repay some of the Alcan debt by quickly on-selling the packaging assets, but the global financial crisis delayed that plan as asset prices tumbled.

Rio Tinto said the remaining Alcan non-aluminum assets were still on the auction block, with their book value likely to be written down ahead of their sale.

Separately, two sources told Reuters, Australian packaging group Amcor Ltd was still in talks to buy some of the remaining packaging assets from Rio, which Citigroup estimates could potentially fetch in excess of $2 billion.

An Amcor spokesman declined to comment.

Analysts widely expect Amcor to raise up to A$2.0 billion in fresh equity if it wins the auction.