FACTBOX: Rio Tinto cuts jobs, capex to pay off debt

LONDON (Reuters) - Miner Rio Tinto said on Wednesday it would cut nearly 13 percent of its workforce, slash capital spending by more than half next year and sell more assets to cut its debt load of nearly $40 billion amid a collapse in commodity prices. Here are the main points of Rio's announcement.

JOBS

Rio is to cut 14,000 jobs out of a total of 112,000. The cuts will be 5,500 of its own employees out of 97,000 and 8,500 contractors out of 15,000. This will result in annual operating cost saving of $1.2 billion and upfront severance costs of $400 million.

CAPEX

Rio will cut capital spending to $4 billion in 2009 down from to a previous estimate of over $9 billion. Half of the $4 billion will be used to maintain existing operations. Some expansion projects will be canceled and others deferred, but the firm said it would only release details early next year.

(A Rio spokesman in Guinea said the company had already decided to postpone its massive Simandou iron ore project in the country, estimated to cost $6 billion.)

Capex for 2010 will be under review and will be reduced to close to levels needed for existing operations if weak market conditions continued, it added.

DEBT

Rio had $38.9 billion in net debt at the end of October and pledged to reduce this by $10 billion by the end of 2009.

The net debt figure comprised: $9.6 billion of bonds, $29.7 billion drawn under a facility to buy aluminum group Alcan last year, $1.9 billion of other debt and $2.3 billion of cash.

The group still has $4.2 billion available in the Alcan facility that it has not yet drawn and $2.3 billion unused committed bilateral facilities with a consortium of 10 banks.

Under the Alcan facility, $8.9 billion must be repaid by October 22, 2009 and $10 billion by October 25, 2010.

INTEREST COSTS, DEBT COVENANT

Rio said the weighted average interest cost of the loan under the Alcan acquisition facility, which is linked to LIBOR, was currently less than three per cent per year.

There is a debt covenant attached to the Alcan facilities, which is a ratio of net debt to underlying EBITDA (earnings before interest, tax, depreciation and amortization) of 4.5 times.

DIVESTMENTS