Global miner Rio Tinto agreed on Monday to sell its Americas food-packaging assets for $1.2 billion to packaging group Bemis Co Inc , raising yet more much-needed cash for the indebted miner.

Rio Tinto, which only last week raised $15.2 billion in one of the world's largest-ever rights issues, said it had sold the assets for $1 billion in cash with the rest potentially paid in the form of shares in U.S.-listed Bemis.

Any packaging assets that Rio is getting rid of its balance sheet is good and will be liked by the market, Olivia Ker, research analyst with Merrill Lynch, said after the news.

Rio Tinto shares were down 1.2 percent at A$49 soon after the announcement, but they outperformed shares in its major mining rival, BHP Billiton , which were down 2 percent.

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 that debt by quickly on-selling the Alcan 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. So far this year, Rio Tinto has announced a total $3.7 billion in asset sales.

The sale of the Food Americas division is the first significant step in reducing the asset portfolio acquired with Alcan, Rio Tinto Chief Financial Officer Guy Elliott said in a statement.

The transaction represents solid value given the challenging financial environment.

Rio Tinto opted for its $15.2 billion rights issue, the world's fifth largest, after aborting a controversial plan to sell $19.5 billion in convertible debt and assets to a major shareholder, Chinese state-owned Chinalco.

At the same time as abandoning the Chinalco deal, it announced a $116 billion iron ore joint venture with BHP Billiton which would deliver both firms $10 billion in savings.

Under the deal announced on Monday, Wisconsin-based Bemis said it was buying 23 flexible-packaging plants in the United States, Canada, Mexico, Brazil, Argentina and New Zealand.

It said it was paying about 6.7 times earnings before interest, tax, depreciation and amortization for the business, when $100 million of tax benefits were taken into account.

(Reporting by Denny Thomas, writing by Mark Bendeich; Editing by Jonathan Standing)

Merrill Lynch