(Figures in U.S. dollars unless noted)
By Allan Dowd
VANCOUVER, British Columbia, April 22 (Reuters) - Teck Cominco’s TCKb.TO agreement with lenders to defer its debt payments gives the company new flexibility in talks to sell a stake in its Elk Valley coal operations, executives said on Wednesday.
Interest by potential partners in the Western Canadian coking coal operations remains high, with suitors ranging from customers to other mining companies, chief executive Don Lindsay said.
Tuesday’s deal with lenders to defer $4.4 billion in debt payments due in 2009 relieves some of the deadline pressure hanging over the Elk Valley talks, Lindsay told reporters following Teck’s annual meeting in Vancouver.
“Now we have a lot of flexibility. We’ll move it ahead and we’ll get it done. But we’ll make sure we get the right deal with the right partner,” Lindsay said as Teck Chairman Norman Keevil stood beside him nodding in agreement.
Lindsay and Keevil said that, in hindsight, they now wish they had worked out a partnership deal before they agreed last year buy out the Fording Canadian Coal Partnership and take control of Elk Valley.
Teck borrowed $9.8 billion to pay for Fording, but did so right on the eve of the international credit crunch and found itself unable to convert its temporary bridge loan into long-term debt.
Lindsay and Keevil acknowledged to shareholders they did not see the credit crunch coming, but noted that when the Fording financing was worked out in September the banks were upset Teck did not want to borrow more money.
The combination of taking on heavy debt and the falling commodity prices has hammered Teck’s shares, which hit a 52-week low of C$3.35 in early March, well off their 52-week high of C$52.90 set in May of last year.
“We all agree we shouldn’t be in this situation, but we are ... and now we have to pull together and get on with fixing it, and we are doing just that,” Keevil said.
Teck officials were clearly braced for some angry questions from shareholders, who packed a Vancouver hotel conference room, but got none.
Lindsay said that, with the debt relief deals, Teck has completed nine parts of its 12-part recovery plan, which also included the sale of non-core assets such as gold mines, layoffs and the suspension of its dividend.
Keevil said Teck’s board still has complete confidence in Lindsay and his management team.
Teck still plans to have its bridge loans converted into long-term debt before the end of the year, and the conditions to do so may better than the market perceives, Lindsay said.
“We are told the markets are open to us and that’s why we’re going to access them as soon as we can,” he said.
Wednesday’s annual meeting also closed an era for the company, approving a name change from Teck Cominco to Teck Resources Ltd. (Reporting Allan Dowd, editing by Rob Wilson)