Teck Resources Ltd. (
TSX: TECK.B,
NYSE: TECK,
Forum) on Friday announced an agreement to divest its remaining two thirds stake in the Waneta Dam generating facility in Trail, B.C. to
Fortis Inc. (
TSX: T.FTS,
Forum) for $1.2 billion.
Fortis expects the transaction to close in the fourth quarter of 2017.
BC Hydro owns one third of the assets and has a right of first offer. If BC Hydro elects to exercise that right within a period of 60 days, Teck will pay a break fee of $25 million.
Under the agreement, Teck has been granted a 20-year lease (with an option to extend by 10 years at comparable rates) for the power to generate its adjacent Trail zinc smelter for payments of $75 million annually.
In a report, Scotiabank said the annual payment is the equivalent to $40/MWh, based on 1,880 Gwh. “We view this power rate as reasonable,’’ Scotiabank said in a report.
Teck’s Class B common shares rose 2% Friday to $25.33.