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Rio Tinto’s £743m sale of US packaging arm
06.07.09
Debt-riven mining giant Rio Tinto today followed up last week's £940 million rights issue fundraiser with the £743 million sale of a packaging division in the United States.
The London Stock Exchange-listed company ran up $38 billion (£23.5 billion) in debt when it bought giant rival Alcan in 2007 at the peak of the commodities boom and has been struggling ever since the downturn started soon after.
The Americas food packaging operations it is selling today to Bemis Co, a large US packager, came as part of that disastrous Alcan deal. Rio had originally hoped that it could reduce the debt incurred on buying Alcan by quickly selling on non-core packaging businesses, but the economic crisis killed off demand from potential buyers.
The massive rights issue last week was the fifth biggest ever, and came after the company was pressurised by shareholders into dumping a plan to offer a stake in itself and lucrative mining assets to Chinese state-owned Chinalco.
The sale to Bemis includes a chain of 23 flexible packaging plants in the United States, Canada, Mexico, Brazil, Argentina and New Zealand.
