Teck Cominco Unloads Kinross Shares

Teck Cominco Ltd. (TCK) announced the sale of 5.6 million Kinross Gold Corp. (KGC) shares on Wednesday for proceeds of $101-million, or $18 per share. They were acquired by Teck during the fourth quarter as part of the proceeds of the sale of its 60% interest in the Chile-based Lobo-Marte gold project to Kinross.

Teck is expected to record a pre-tax gain of C$160-million in the first quarter as a result of the transaction.

Since the end of 2008, Teck has announced an estimated $316-million in asset sales, according to Desjardins Securities analyst John Hughes. This compares with $6.4-billion of total long-term debt due by Oct. 31, 2009.

He told clients:

"Obviously, the gross value of the assets sold in the year to date is small relative to the total debt owed and ‘coming due’ by the end of October. We view each asset sale as a small step toward securing cash and realizing the company’s ultimate strategy of reducing debt to a level that should allow for a successful refinancing of its remaining debt."

This is principally Teck's $5.3-billion bridge loan facility, at or before October 31, 2009.

Mr. Hughes estimated the value of several assets that could be sold, including a 30% interest in the Elk Valley Coal assets for $2.25-billion. If market conditions are reasonable, Teck's management may consider issuing corporate debt and/or new equity as part of an effort to restructure its balance sheet, he added.

Comments

[gdclarke:]

Is this a bearish sign for miners? Or a short opportunity in TCK?

Apr 12 08:20 AM

[Edward Ulys...:]

Taking a look at the Top 10 Major Holders of KGC, you'll see that Paulson & Company just took a new MAJOR position recently. If one could figure out exactly who Paulson & Company is fronting for, we would be able to see who's really pulling our strings. But that's why private equity and hedge funds have little reporting responsibility, so that it's difficult, or impossible, for the public to figure out who's selling them out.

Apr 12 10:48 AM

[ArtfulDodger:]

More companies need to take their massive debt loads seriously.

I would say that, in the long run, this is bullish for TCK.

Have owned it, do not now, but am watching.

Apr 12 10:57 AM

[Mayascribe:]

Or...Teck Cominco directors are making themselves more able to defend a takeover from BH Billiton. Or...making themselves more attractive for an asset merge. Crazy stuff. Either way, I've enjoyed the recent run up in TCK's stock price. Monday will be a headscratcher as to add, hold, or sell, or just sell a fraction of shares.

Apr 12 01:24 PM

[Sweetness:]

I'll try to dispel some of your ignorance...

Paulson and Co. is of course now famous for seeing the housing bubble before it popped and profiting to a mind-boggling extent.

They have over $30b under management.

Though I would never presume to speak for Mr. Paulson, it is entirely possible that he is bullish on gold because of the unprecedented money supply increase we are seeing.

So, why is it that you inexplicably believe their ownership in KGC belongs to someone else? FYI- they also have a major position in AU.

If you really believe something is untoward, why don't you call their general counsel, whose contact information is listed on their most recent 13F and ask him?


On Apr 12 10:48 AM Edward Ulysses Cate wrote:

> Taking a look at the Top 10 Major Holders of KGC, you'll see that
> Paulson & Company just took a new MAJOR position recently. If
> one could figure out exactly who Paulson & Company is fronting
> for, we would be able to see who's really pulling our strings. But
> that's why private equity and hedge funds have little reporting responsibility,
> so that it's difficult, or impossible, for the public to figure out
> who's selling them out.

Apr 14 12:41 PM