* Dividend was dropped in late 2008 after Fording takeover (Updates with comments at AGM. In U.S. dollars unless noted)
VANCOUVER, April 22 (Reuters) - Teck Resources TCKb.TO said on Thursday it will reinstate the common share dividend it suspended in late 2008 while struggling to pay off billions of dollars in acquisition debt. The news sent the company’s shares up by 5 percent.
The Canadian miner said it will pay a semi-annual dividend of 20 Canadian cents a share initially, which is down from the previous 50 Canadian cent semi-annual payout.
The dividend set on Thursday was consistent with what the company had paid historically, and will allow it to continue replenishing its cash reserves, Chief Executive Don Lindsay said.
“I think it is a comfortable level,” Lindsay told reporters following Teck’s annual shareholder meeting in Vancouver.
Lindsay said the higher dividends that Teck paid in the mid part of the decade reflected the strong cash reserves it enjoyed at that time amid record high commodity prices.
“We are in a strong cash generation phase now, but we have not built up that cash level yet,” he said.
Lindsay had told analysts on Wednesday that reinstating a dividend was a high priority following the paydown of $9.8 billion in short-term debt taken on to finance the takeover of Fording Canadian Coal Trust in late 2008.
The company made its final debt payment on Thursday, Lindsay told shareholders.
Lindsay has long acknowledged the unfortunate timing of Teck’s Fording purchase and debt build-up, coming on the eve of the recession, but he said the company has emerged in stronger shape for the long-term.
“Now we’re rich in resources and we’re moving into a new phase where we’re converting resources into production and cash flow,” he said.
Shares of Vancouver-based Teck closed up C$2.28 at C$43.99 on the Toronto Stock Exchange on Thursday.
$1=$1.00 Canadian Reporting by Allan Dowd and Cameron French; editing by Rob Wilson