Teck Resources Sells 17.2% Shares To China Fund For $1.5 Billion

Vancouver, BC (AHN) - Canadian diversified miner Teck Resources Limited (NYSE:TCK) said Friday it sold 17.2 percent stake to State-owned China Investment Corp., helping the firm to bolster financial statements.

China Investment Corp (CIC), the country's $200 billion fund sovereign wealth fund, will invest 1.74 billion Canadian dollars ($1.5 billion) in cash to purchase the stake, effectively lowering Teck's debt.

Analysts have been expecting China to boost its demand for raw materials for metal production. The latest move is a positive sign of increasing investor confidence in the global markets.

CIC will buy 101.3-million of Teck's class B subordinate voting shares through a wholly-owned subsidiary, giving the Chinese firm about 17.2 percent of equity and 6.7 percent voting interests in Teck.

Vancouver-based Teck Resources said the shares will be sold for a price tag of 17.21 Canadian dollars each, a 7 percent discount to Thursday's closing price on the Toronto Stock Exchange.

"This transaction will have an immediate and very positive effect on Teck's balance sheet, and represents an attractive opportunity for Teck to establish a relationship with a major Chinese financial investor, with a deep understanding of China, the world's largest consumer of our principal products," Teck President and CEO Don Lindsay said in a statement.

Separately, CIC said that it is acquiring the Class B Shares "for investment purposes as a long-term passive financial investor." CIC does not currently hold any of Teck's shares.

Teck, which is a leading producer of zinc, copper, and metallurgical coal, said CIC will hold the shares for at least one year after the completion of the transaction.

The deal is expected to be closed on or around July 14, and is subject to customary conditions, including applicable stock exchange approvals.

CIC has also agreed that after the one year hold period, it will not sell the purchased shares to a participant in the worldwide mining, metals or minerals industries, or to a material customer of Teck.

Upon closing of the transaction, Teck's Class A shareholders as a group will hold a 61.8 per cent voting interest in Teck with Temagami Mining Company Ltd. holding a 28.5 per cent voting interest.