Teck Resources (TSX: T.TCK.B, Stock Forum) announced Friday that Chinese state-owned China Investment Corporation will purchase 101.3 million Class B subordinate voting shares of Teck for C$17.21 per share.
Vancouver-based Teck says the net proceeds of the $1.74 billion transaction will reduce outstanding bank debt.
On closing, CIC will indirectly hold 17.5% of Teck's outstanding Class B subordinate voting shares, representing 17.2% equity and 6.7% voting interests in Teck. Teck's Class A shareholders will hold a 61.8% voting interest in Teck with Temagami Mining Company
Ltd. holding a 28.5% voting interest.
"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," said Teck president and CEO Don Lindsay.
CIC says it is acquiring the Class B shares for investment purposes as a long- term passive financial investor and has agreed to hold the purchased shares for at least one year.
The transaction is expected to close around July 14.
Shares of Teck Resources climbed 3% to $19.12 Friday.
On the company’s Bullboard, vascris15 asked: “So good or bad ? dilution versus cleaner balance sheet ..[sic]”…
