* To raise semi-annual dividend payout by 50 pct
* Says move reflects confidence in its balance sheet
* Plan to buy back up to $650 mln of high-yield debt
* Shares close up 1 percent in Toronto, New York (Adds details on buyback; Figures in U.S. dollars, unless noted)
By Euan Rocha
TORONTO, Nov 17 (Reuters) - Diversified miner Teck Resources TCKb.TO said on Wednesday it will raise its dividend by 50 percent, signaling its confidence that rising commodity prices will enable it to keep generating cash.
The move marks a further sign that the company has recovered from a decision to take on $9.8 billion in short-term debt to finance its acquisition of coal producer Fording in mid-2008.
The deal took place just as credit markets were seizing up and commodity prices started a free-fall, forcing Teck to suspend the dividend, among other measures.
The 50 percent increase comes seven months after the company reinstated the payout last April.
Analysts said Teck could have further dividend increases in the offing.
“While Teck will have significant capex spending over the next few years to support internal growth projects, we believe under the current commodity price environment Teck will still generate significant excess cash which could potentially be returned to shareholders through dividend increases or share buybacks,” UBS analyst Brian MacArthur wrote in a research note.
In late 2008, Teck was forced to suspend its dividend, slow operations, lay off workers and sell assets in a bid to survive the global financial crisis.
The company finished paying down the last of the short-term debt it took on to buy Fording earlier this year.
Teck also said it plans to buy back up to $650 million of its high-yield debt via a Dutch auction process.
The company has more than $2.8 billion of high-yield senior secured notes outstanding. Buying back the notes will help reduce Teck’s near-term annual interest expenses.
The company, which operates copper mines in Chile, coal mines in Canada and the world’s largest zinc mine in Alaska, also said it would pay a semi-annual dividend of 30 Canadian cents a share, up from the prior payout of 20 Canadian cents.
“This dividend increase reflects our confidence in our current balance sheet strength and our ability to fund our strong portfolio of growth assets,” said Chief Executive Don Lindsay a statement.
The dividend is payable to shareholders of record at the close of business on Dec. 15. The dividend will be paid to both Class A and Class B shareholders on Jan. 4.
Shares of Teck closed up about 1 percent on both the Toronto and New York Stock Exchanges.
Teck is one of the world’s top exporters of coking coal — a key raw material used in the manufacture of steel. The company is also expanding its copper output from Chile, while transitioning to a new deposit at its Red Dog zinc mine in Alaska. ($1= $1.02 Canadian) (Reporting by Euan Rocha; Editing by Frank McGurty)