February 4, 2010 / 2:20 PM / 8 years ago

UPDATE 2-Teck's sale of Waneta Dam stake approved

* BC Hydro buys one-third stake for C$825 mln

* Deal to close within 10 business days

* Enough power to supply 100,000 homes annually (Adds BC Hydro comments on power; in U.S. dollars unless noted)

TORONTO, Feb 4 (Reuters) - Teck Resources Ltd TCKb.TO said on Thursday the British Columbia Utilities Commission had approved the sale of a one-third interest in its Waneta Dam to BC Hydro for C$825 million ($771 million).

The base metal miner announced plans in June 2009 that it would sell the stake in the dam in a bid to reduce its debt load, following its acquisition of Fording Canadian Coal Trust.

Teck said the commission had concluded the proposed deal could close, as the expenditure proposed by BC Hydro to acquire the stake was in the public interest. The dam is located in southeastern British Columbia, near Teck’s smelting and refining operations in the city of Trail.

The deal will secure approximately 1,000 gigawatt hours of electricity annually for BC Hydro, the utility said, enough to supply 100,000 homes annually at C$64 per megawattt hour over the life of the dam.

The electricity, surplus to Teck’s needs, was previously sold mostly to the United States, BC Hydro said.

Vancouver-based Teck expects the deal to close within the next 10 business days.

Teck paid nearly $14 billion in 2008 to acquire Fording, but the timing of the deal proved disastrous, as the financial crisis hurt prices of copper and zinc, while coal demand dried up, wiping out cash flows that Teck had planned to use to pay off the debt.

Meanwhile, credit markets froze up, derailing plans to finance the deal through bond offerings and forcing Teck to cut costs and embark on an asset sale campaign that, for a while, seemed like it might strip Teck of some of its best properties.

But some non-core asset sales, coupled with a bond issue and the sale of a 17 percent equity stake to state-owned China Investment Corp, helped the company rein in its debt load.

In October, Teck said it would not sell any more assets and might start considering acquisitions. [ID:nN29365420] (Reporting by Euan Rocha and Susan Taylor in Ottawa, editing by Rob Wilson)

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