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.