Teck shares fall on debt-cutting plan
Last Updated: Thursday, November 20, 2008 | 5:16 PM ET
CBC News
Shares in Teck Cominco Ltd. were crunched in trading Thursday after the debt-laden mining company suspended its dividend and unveiled its first steps to reduce its borrowings.
Teck shares plunged more than 21 per cent, or $1.12, to close the trading day on the TSX at $4.10.
The Vancouver-based mining giant announced a number of steps it would take to generate cash and reduce spending as Teck Cominco deals with a huge debtload.
"Current global economic and financial market conditions dictate that we take all prudent steps available to us to significantly reduce spending,” said Don Lindsay, Teck's president and chief executive officer.
Teck said it will stop paying dividends on its A and B shares, saving $486 million, but hurting the short-term return for existing investors.
The mining giant also slashed capital budget for 2009 by $730 million. Teck said it will now spend $250 million on capital expenditures next year.
Teck also sold its stake in the Lobo-Marte property in Chile to Kinross Gold Corp. for $40 million in cash and another $70 million in Kinross stock.
Finally, the company said it was exiting from the Petaquilla cooper project in Panama, only retaining a small royalty interest in the property.
Teck's problem is indicative of the current global economic crisis.
Last summer, Teck bought the Fording Canadian Coal Trust for $12.4 billion. To pay for the transaction, the company borrowed almost $10 billion, $5.4 billion in a short-term bridge loan and $4 billion in another term loan.
Both financings needed to be repaid, but with commodity prices diving, Fording was now only worth a fraction of the price that Teck Cominco paid for the coal company.
As a result, Teck started looking for places to save large amounts of cash.
Besides the asset sale, Teck also will reduce zinc production and not go ahead with plans for a new upgrader at the Fort Hills oilsands project in Alberta.
In its latest quarter, Teck posted earnings of $424 million, down from $490 million for the third quarter of 2007.
Share Tools
Top News Headlines
- Former Expos catcher Gary Carter succumbs to brain cancer
- Hall of Fame catcher Gary Carter, who left an indelible mark on baseball in Canada during his 12 years with the Montreal Expos, died on Thursday. The man nicknamed "Kid" or "Kid Carter" for his ever-smiling face and cheerfulness is free from the inoperable brain cancer that sapped his energy and took his life at age 57. more »
- UN backs resolution condemning Syrian regime
- The UN General Assembly has backed a non-binding Arab League-sponsored resolution calling on Syrian President Bashar al-Assad to step down and end his regime's violent crackdown on dissidents. more »
- 7 MPs and their fiery quotes
- The election of a majority government was seen by some as a chance for less acrimonious politics on Parliament Hill. But the past week has seen its fair share of inflammatory rhetoric on both sides of the House. more »
- Dog kills newborn in Alberta community
- Officials in Airdrie are revealing few details about the fatal mauling of an infant by a family dog in the southern Alberta city. more »
Latest Business Headlines
- Euro rises on report ECB will help Greece
- The euro rose Thursday on a report that the European Central Bank is providing Greece with debt relief. more »
- Sears cuts prices on more than 5,000 items
- Sears Canada is cutting prices on more than 5,000 items as the department store chain and other Canadian retailers gear up for more intense competition — including from the U.S. discount giant Target. more »
- Oliver calls European oilsands threat grandstanding
- Federal Natural Resources Minister Joe Oliver is calling a European effort to bar oil imports from Alberta's oilsands nothing more than grandstanding more »
- New Canada-China energy deals may be good for U.S. too
- U.S. Ambassador David Jacobson said in Montreal on Thursday that it's good for the United States when Canada, its largest trading partner, increases its trade in new markets like China. more »
Lang & O'Leary Exchange
Markets
| Index | Last Trade | Change |
|---|---|---|
| TSX COMPOSITE | 12485.59 | 123.56 |
| DOW | 12904.08 | 123.13 |
| NASDAQ | 2959.85 | 44.02 |
| SP 500 | 1358.04 | 14.81 |
| NYSE COMPOSITE | 8092.19 | 93.54 |
| AMEX | 2448.24 | 28.25 |
| TSX-VENTURE | 1648.11 | 14.53 |
The data on this site is informational only and may be delayed; it is not intended as trading or investment advice and you should not rely on it as such.
Business Features
- Dog kills newborn in Alberta community
- Degrassi's Wheels death announced, over 4 years later
- Refugee reforms include fingerprints, no appeals for some
- Montreal telemarketers in fraud case still making calls
- Bully victim's mother tells of 'suicide box'
- Honduras prison fire is world's deadliest
- Nortel collapse linked to Chinese hackers
- 2 small earthquakes rattle Vancouver Island
- Barefoot girl's icy trek not blamed on babysitter
