Sun, Jul 05, 2009 - Page 11 News List

Teck sells stake to Chinese firm

DIGGING OUT OF A HOLE: The mining company will sell the 17 percent stake to China Investment Corp in an effort to pay down nearly US$10 billion in bank debt

AP AND BLOOMBERG , VANCOUVER, BRITISH COLUMBIA

Mining company Teck Resources Ltd said on Friday it is selling a 17 percent stake to China Investment Corp (CIC, 中國投資公司) for C$1.74 billion (US$1.5 billion) in a bid to reduce its debt load.

The Vancouver-based company said CIC, the world’s largest commodity buyer, will buy 101.3 million class B voting shares for C$17.21 each. CIC will hold onto the stock for at least a year, the mining company said.

The proceeds from the private placement will go toward paying down nearly US$10 billion in bank debt and will also give the ­company a chance to forge a partnership with a major foreign investor, Teck’s chief executive said in a conference call.

“We will have a financial relationship with a very deep-pocketed investor who would potentially participate in future development projects,” CEO Don Lindsay said.

The sale, which is still subject to regulatory approval, is slated to close on July 14.

Teck has been selling assets and cutting costs to pay down the debt acquired after the US$9.8-­billion purchase of Fording Canadian Coal Trust last year.

China, on the other hand, has been aggressively pursuing major acquisitions or investments in commodity companies. In the oil industry, the Chinese have become the most aggressive deal makers, taking advantage of low oil prices to help feed the country’s energy needs.

Last week, China’s Sinopec Corp (中國石化) announced it will acquire oil explorer Addax Petroleum for US$7.2 billion, in what would be the largest overseas takeover ever by a Chinese company.

Sinopec, a refiner, would gain access to substantial reserves in West Africa and the Middle East if the takeover of Addax is approved.

China National Offshore Oil Corp (中國海洋石油), meanwhile, may continue to bid for oilfields in Iraq after the Gulf country awarded a contract to its bigger rival, China National Petroleum Corp (中國石油天然氣).

“We may continue to participate in the second round,” China National Offshore president Fu Chengyu (傅成玉) said yesterday in Beijing.

Iraq plans to award contracts for oil and gas field exploration and development in a second licensing round to be held before the end of the year, Abdul Mahdy al-Ameedi, deputy director general of the Petroleum Contracts Licensing Dept, said on Thursday.

Iraq gave the development contract for Rumaila, the largest oilfield in the Middle Eastern nation, to BP Plc and China National ­Petroleum, and failed to award most of the contracts offered in an auction on June 30. The government aims to boost oil output to 4 million barrels a day within the next five years, from about 2.4 million barrels.

The BP-led group agreed to develop the field at a cost of US$2 a barrel after recovering investment, lower than the prices BP and Exxon initially bid, the ministry said in a statement then.

China National Offshore, the nation’s third-biggest oil explorer and the parent of Hong Kong-listed CNOOC Ltd, offered bids for different fields in the June 30 auction, Fu said.

“Our costs are higher then US$2 a barrel; we couldn’t lower that to a level that the Iraqi government can accept,” he said.

This story has been viewed 1442 times.
TOP top