Alcan says not worried about Rio deal financing

TORONTO - Alcan Inc. is not concerned that rising borrowing costs could jeopardize Rio Tinto's debt-funded $38.1 billion takeover, an official at the Canadian aluminum maker said on Friday. "I think that, from where we are, we have no concerns about Rio Tinto's ability to finance the transaction," said Alcan's investor relations vice-president, Ulf Quellmann. He noted that the debt used to finance the deal is committed bank financing, underwritten by Royal Bank of Scotland Deutsche Bank, Credit Suisse and Societe Generale. A portion of the deal is also expected to be funded by the sale of Alcan's packaging business. Sources told Reuters on Friday that Alcan is close to a deal to sell the packaging arm to bubble wrap maker Sealed Air Corp. for between $4 billion and $5 billion. Concerns about rapidly tightening credit -- sparked by the U.S. subprime mortgage meltdown -- have prompted concerns that debt costs could rise sharply. Charles Bradford, an analyst at Bradford Research/Soleil, said he was not concerned that higher borrowing costs could stand in the way of the deal going through. "This is very high-quality credit. The company had almost no debt," he said. Alcan shares were up $2.22 at $94.53 on the New York Stock Exchange on Friday, below Rio Tinto's $101 per share offer. The stock has traded in a $95 to $97 range in New York since the deal was announced. The shares were up C$1.28 at C$100.25 on the Toronto Stock Exchange.