INSTANT VIEW: Rio cuts 14,000 jobs, halves spending

SINGAPORE (Reuters) - Global miner Rio Tinto, saddled with almost $40 billion in net debt, announced plans on Wednesday to cut capital spending, slash jobs and boost asset sales, but said it would hold its dividend steady.

Rio has been under pressure since its share price collapsed after larger rival BHP Billiton scrapped a $66 billion takeover bid for the company last month.

KEY POINTS:

-- Rio cuts 14,000 jobs

-- More than halves net capital expenditure outlook for 2009 to $4 billion from over $9 billion

-- 2008 dividend to be held at 2007 level of US$1.36 with no 20 percent uplift in 2008 and 2009

-- Expands scope of assets targeted for divestment including significant assets not previously highlighted for sale

-- Rio's Australian shares closed 12 percent higher ahead of the announcement in a broader market up 1 percent.

COMMENTARY:

PETER CHILTON, FUND MANAGER, CONSTELLATION CAPITAL MANAGEMENT, SYDNEY "Probably the biggest issue is the net debt they have got. Their share price has been really slaughtered because of that debt and the BHP bid falling over. So Rio probably had to take the initiative and say: 'look, we are in here for the long haul. I think the pressure is on.

"People do recognize that probably relative to BHP, Rio is undervalued. The main reason for the undervaluation is that people are concerned about debt refinancing. As soon as you remove that risk, then Rio can recover strongly from here."

GLYN LAWCOCK, ANALYST, UBS, SYDNEY

"I think it's broadly in line with what the market was looking for. It addresses all the key issues. But there is more detail yet to come out.

"It still doesn't mean they're out of the woods. This goes a long way to ensuring they have enough cash over the next two years to make their debt payments.

"The question now is which projects they have to give up. They haven't yet given any detail. That will determine the growth prospects for the company and its relative attractiveness. If this company is being forced to cut back on its growth then obviously, relative to its peer group, it's not as attractive."

TIM SCHROEDERS, PORTFOLIO MANAGER, PENGANA CAPITAL,