Teck shares slump with China’s Sell

A unit of Chinese sovereign wealth fund China Investment Corp (CIC), a cornerstone shareholder of Teck Resources Ltd, has sold around 41.5 per cent of its stake in the Canadian miner, Teck said on Tuesday, sending its shares tumbling.

Teck said that CIC, which bought a 17.2 per cent stake in Vancouver-based Teck in 2009, had advised it that the private sale was done in the “ordinary course of its portfolio adjustment.”

CIC intends to hold the balance of its Teck shares as a long-term financial investor, Teck said.

Related: Four warning signs that Teck’s spectacular gains are over (for subscribers)

The buyer of the stake was not identified and the sale price of the shares was not disclosed. Teck did not immediately respond to a request for comment.

CIC bought the equity stake in July 2009 for $1.74-billion at $17.21 a share, meaning if the stock was sold near market value, the fund would have made a tidy profit.

Teck’s B shares slumped as much as 7.3 per cent on the Toronto Stock Exchange before closing the day down 6.68% at $29.47. Its less liquid A shares fell 8 per cent to $29.23.

Both classes of Teck shares have surged around 50 per cent in the last year on the back of rallying prices for coal and zinc, and more recently for copper.

Teck, Canada’s biggest diversified miner of commodities including copper, coal and gold, has two classes of shares: more liquid “B” shares that carry lower voting rights, and illiquid “A” shares with higher voting rights.

The wealthy Keevil family maintains control of Teck through its ownership of the higher-voting A shares. CIC’s stake was in the lower-voting B shares.

Teck said CIC’s Fullbloom Investment Corp had sold 42 million B shares, which is equal to 7.36 per cent of Teck’s B shares and 7.26 per cent of all outstanding Teck stock.

“This news does not change our investment thesis for Teck and we continue to expect significant free cash flow to be generated in the current commodity price environment…,” RBC Capital Markets analyst Stephen Walker said in a note to clients.

Following the transaction, CIC would indirectly hold 59.3 million B shares, or 10.4 per cent of the outstanding B shares, with a voting interest of approximately 4.4 per cent in Teck.

“We have full confidence in the management of Teck. The fundamentals of the company are sound. We are supportive of the strategic direction of Teck and look forward to ongoing close cooperation in future,” Ju Weimin, CIC’s executive vice President said in a statement.

Teck Director since 1963
Norman B. Keevil joined the Board of Teck in 1963. He is a graduate of the University of Toronto (B.A. Sc.) and the University of California at Berkeley (Ph.D.). He received an honorary LL.D from the University of British Columbia in May 1993. He was Vice President Exploration at Teck Corporation from 1962 to 1968, Executive Vice President from 1968 to 1981, President and Chief Executive Officer from 1981 to 2001 and has been Chairman of the Board of Teck since 2001. He is a lifetime director of the Mining Association of Canada. Dr. Keevil was inducted into the Canadian Mining Hall of Fame in January 2004 and the Canadian Business Hall of Fame in 2012.

Sources: The Globe and Mail and Teck