September 5, 2017 / 4:49 PM / in a month

Canadian miner Teck slumps as China's CIC fund sells partial stake

VANCOUVER (Reuters) - A unit of Chinese sovereign wealth fund China Investment Corp (CIC), a cornerstone shareholder of Teck Resources Ltd, has sold around 41.5 percent of its stake in the Canadian miner, Teck said on Tuesday, sending its shares tumbling.

Teck said that CIC, which bought a 17.2 percent stake in Vancouver-based Teck in 2009, had advised it that the private sale was done in the “ordinary course of its portfolio adjustment”.

CIC intends to hold the balance of its Teck shares as a long-term financial investor, Teck said.

The buyer of the stake was not identified and the sale price of the shares was not disclosed. Teck did not immediately respond to a request for comment.

CIC bought the equity stake in July 2009 for C$1.74 billion ($1.41 billion) at C$17.21 a share, meaning if the stock was sold near market value, the fund would have made a tidy profit.

Teck’s B shares slumped 7.3 percent to C$29.29 on the Toronto Stock Exchange. Its less liquid A shares fell 8 percent to C$29.23.

Both classes of Teck shares have surged around 50 percent in the last year on the back of rallying prices for coal and zinc, and more recently for copper.

Teck, Canada’s biggest diversified miner of commodities including copper, coal and gold, has two classes of shares: more liquid “B” shares that carry lower voting rights, and illiquid “A” shares with higher voting rights.

The wealthy Keevil family maintains control of Teck through its ownership of the higher-voting A shares. CIC’s stake was in the lower-voting B shares.

Teck said CIC’s Fullbloom Investment Corp had sold 42 million B shares, which is equal to 7.36 percent of Teck’s B shares and 7.26 percent of all outstanding Teck stock.

“This news does not change our investment thesis for Teck and we continue to expect significant free cash flow to be generated in the current commodity price environment...,” RBC Capital Markets analyst Stephen Walker said in a note to clients.

Following the transaction, CIC would indirectly hold 59.3 million B shares, or 10.4 percent of the outstanding B shares, with a voting interest of approximately 4.4 percent in Teck.

“We have full confidence in the management of Teck. The fundamentals of the company are sound. We are supportive of the strategic direction of Teck and look forward to ongoing close cooperation in future,” Ju Weimin, CIC’s executive vice President said in a statement.

($1 = 1.2379 Canadian dollars)

Reporting by Nicole Mordant in Vancouver; Editing by Jeffrey Benkoe and Marguerita Choy

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