Story here from UBS saying their will be a cash shortfall, with...

Story here from UBS saying their will be a cash shortfall, with regard to meeting their maturing loan of $9 billion next year.

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Rio Tinto's Ore Cuts May Trim Profit by 9%, UBS Says (Update1)

By Rebecca Keenan

Nov. 12 (Bloomberg) -- Rio Tinto Group's decision cut to its iron ore production forecast this year may reduce earnings by 9 percent, reinforcing the need for asset sales or spending curbs to meet its debt repayments, UBS AG said.

Net profit at the world's third-largest mining company for 2008 may be $11.06 billion, down from an estimate of $12.15 billion, UBS analysts led by Glyn Lawcock said in a research note yesterday. Lower commodity price forecasts will also reduce earnings, it said.

Rio, the second-biggest exporter of iron ore, said this week annual output will be 10 percent below its forecast because of reduced demand from Chinese steelmakers as the global financial crisis worsens. Lower earnings may force Rio to reduce spending to meet its debt repayments, Lawcock said.

``We estimate that Rio Tinto would need to generate around $7 billion in cash flow before October 2009 to pay the maturing term loan'' of $9 billion, he said in the note. Rio will generate cash flow of $3.4 billion in the six months ending Dec. 30 and $2.4 billion in the next half, leaving it short $1.2 billion, he said.

Rio, based in London and traded in the U.K. and Australia, dropped 1.7 percent to A$75.20 at the 4:10 p.m. at the Sydney time close on the Australian stock exchange. Rio has $44 billion in debt, UBS said.

Merrill Lynch & Co. has said Rio's iron ore production cuts would lower earnings this year by 4 percent to $12.8 billion.

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From the Rio website....has them on a much higher loan repayment schedule, than UBS. Hard to imagine the analysist has it so wrong....but anyway some concern.

30 August 2007

Loan syndication for financing of Alcan acquisition successfully completed
Rio Tinto has successfully completed the sub-underwriting phase of the syndication of its US$40 billion term loan and revolving credit facilities (the "Facilities"). This is the largest ever loan facility raised by a UK corporate and the fourth largest worldwide.

Facility details
Structure of the US$40bn Facilities

Facility A US$15bn Term Loan 364-days (1 year extension)
Facility B US$10bn Revolving Credit Facility 3 years
Facility C US$5bn Revolving Credit Facility 5 years
Facility D US$10bn Term Loan 5 years + 1 day