Rio Tinto warns on Alcan

RIO Tinto has warned it will write down parts of its Alcan aluminium packaging business after a long and fruitless search to find a buyer. The mining giant is reviewing the book value of the remaining packaging assets after selling the US unit to Wisconsin-based Bemis Inc for $US1.2 billion ($A1.5 billion). Rio said it would make the adjustments to its balance sheet ahead of its half-year results announcement next month. "The group will review the carrying values of the remaining Alcan packaging business, which are expected to remain classified as assets held for sale in the group's interim financial statements," it said. "The group's expectation is that this review may result in some downward revision, the extent of which will be determined and announced in conjunction with the group's 2009 half-year results." Rio acquired the packaging business as part of its $US38 billion top-of-the-cycle acquisition of Canadian aluminium giant Alcan. Analysts valued the unit at as much as $US10 billion at the height of the commodities boom but a dramatic decline in aluminium prices last year has since slashed its profitability. Rio has been under pressure to offload the business -- along with a long list of non-core assets in other commodities -- to help repay the massive debts from its Alcan purchase in the face of the global financial crisis. The agreement with Bemis comes just days after the completion of Rio's record-breaking $US15.2 billion rights issue for Australian and British shareholders. Rio chief financial officer Guy Elliott said the Food America sale was the first major step in reducing the asset portfolio acquired with Alcan. "The transaction represents solid value given the challenging financial environment," he said. Bemis beat parties including Amcor and US private equity operators Apollo Global Management and Bain Capital. source:www.news.com.au