Fording approves Teck takeover
Fording Canadian Coal Trust voted to accept a $14-billion US takeover by Teck Cominco Ltd. on Tuesday, the same day Teck sealed a $10-billion financing arrangement to pay for the purchase.
Ninety-eight per cent of Fording unitholders who cast ballots endorsed the deal at a special meeting in Calgary. Sixty per cent of unitholders voted.
Fording units surged more than 10 per cent Tuesday, lifted on an overall rising tide for commodity stocks with a gain of $8.08 to $87.20 on the Toronto Stock Exchange.
Teck has offered $12.4 billion US in cash plus shares worth about $1.5 billion Cdn for Fording.
Each Fording unit is to be exchanged for $82 US in cash and 0.245 of a Teck class B subordinate voting share. At the time the deal was announced, Fording was valued at about $91 Cdn per unit.
At the current exchange rate and Teck share price, the deal values the units at about $94.50 Cdn.
Fording units were beaten down to below $70 in recent weeks amid doubts about Teck's financing and about economic prospects for coal and metals.
Teck said Tuesday that it has definitive agreements for the $9.8 billion US -- a $4-billion senior term loan and a $5.81-billion bridge facility.
Teck had offered an assurance Monday that the financing's approval was imminent, but its shares sank 14 per cent on the day, swept down in the overall market meltdown.
On Tuesday, Teck shares rose alongside the TSX rebound, climbing $2.45, or 8.5 per cent, to $31.37.
Turmoil in the U.S. financial system had cast doubt on the financing, in particular because of the involvement of Merrill Lynch, now being taken over by Bank of America.
Merrill committed to lend 20 per cent of the $9.8 billion to Teck. Similar commitments came from JP Morgan and Citigroup.
Canadian banks CIBC, Royal Bank and Bank of Montreal are each providing 13.3 per cent of the $9.8 billion US.
Last week, Fording said it had received all regulatory approvals for the transaction, which is expected to close at the end of October.
Fording holds a 60 per cent interest in the metallurgical coal operations of the Elk Valley Coal Partnership. Teck owns the other 40 per cent.