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
- Canadian Pacific strikers face back-to-work legislation
- Labour Minister Lisa Raitt is prepared to end the Canadian Pacific Railway strike if necessary, after both CP and the union rejected a proposal for voluntary arbitration by the government-appointed negotiator on Sunday. Raitt says she is "extremely disappointed." more »
- Syrian regime denies role in Houla massacre
- The UN Security Council condemned the Syrian regime at an emergency meeting Sunday, holding president Bashar al-Assad's military responsible for the massacre of more than 100 people, dozens of whom were children younger than 10 years old. more »
- Ryder Hesjedal wins prestigious Giro d'Italia
- Victoria native Ryder Hesjedal has become the first Canadian to win one of the cycling world's three Grand Tour events, wrapping up the 2012 Giro d'Italia with an excellent performance in the final stage in Milan. more »
- Neighbour may have helped find missing kids in Mexico
- Two Winnipeg children who had been missing for nearly four years were found in Mexico after a man raised concerns about his neighbour, according to a private investigator. more »
Latest Business Headlines
- Bankia asks Spain for €19B
- The board of directors of Spain's troubled bank, Bankia, has asked the Spanish government for €19 billion ($24.5 billion Cdn) in financial support. more »
- EI reforms aim to boost employment, Flaherty says
- Finance Minister Jim Flaherty defended his government's proposals to change employment insurance, saying the aim is to remove "disincentives to employment." more »
- Employment Insurance review boards to be scrapped
- The federal government is scrapping two review boards used by people appealing decisions made about their employment insurance. more »
- Ottawa moves to limit foreign investment reviews
- The federal government is raising to $1 billion the amount of foreign money that can go into a Canadian company before the investment is reviewed. The review has been used in the past to block foreign takeovers of MDA and Potash Corp. more »
Lang & O'Leary Exchange
Markets
| Index | Last Trade | Change |
|---|---|---|
| TSX COMPOSITE | 11576.47 | 10.4 |
| DOW | 12454.83 | -74.92 |
| NASDAQ | 2837.53 | -1.85 |
| SP 500 | 1317.82 | -2.86 |
| NYSE COMPOSITE | 7534.32 | -18.01 |
| AMEX | 2227.37 | 1.45 |
| TSX-VENTURE | 1309.27 | 26.8 |
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
- Seniors float above Montreal's Quartier Latin
- Accused in blast that killed Alberta mom handled her funds
- Remains found in bag on Cape Breton river ID'd
- Neighbour may have helped find missing kids in Mexico
- Quebec students and province to resume talks
- Lip-dub marriage proposal an internet hit
- Syrian regime denies role in Houla massacre
- B.C. NDP calls for unity in fighting coast guard closure
- Canadian Pacific strikers face back-to-work legislation
