Mr. Don Lindsay reports
TECK ANNOUNCES SHARE BUYBACK INCREASE TO $1 BILLION AND REDEMPTION OF US$600 MILLION PRINCIPAL AMOUNT OF NOTES
Teck Resources Ltd. will apply an additional $600-million of cash on hand to repurchase Class B subordinate voting shares under Teck's previously announced normal course issuer bid program, bringing the total share buyback announced since November, 2018, to $1-billion. The $400-million of share repurchases previously announced in November, 2018, are now complete.
Teck has also issued a notice of redemption to redeem, on June 29, 2019, all of the $600-million (U.S.) principal amount of its outstanding 8.5 per cent notes due in June, 2024. Following this redemption, Teck will have no significant note maturities due until 2035, and notes outstanding will have been reduced from $7.2-billion (U.S.) to $3.2-billion (U.S.). Earlier this year, Teck regained its investment-grade credit rating from all four rating agencies. Teck expects to realize a net pretax interest expense reduction of approximately $36-million (U.S.) annually and to record a net after-tax accounting charge of approximately $106-million (U.S.) in connection with the redemption, of which $68-million (U.S.) is non-cash.
On completion of the additional buyback and redemption announced today, Teck will have returned approximately $1.8-billion to shareholders through buybacks and dividends since it changed its distribution policy in November, 2017.
Separately, Teck announced today the signing of the $2.5-billion (U.S.) limited recourse project finance facility to finance the development of the Quebrada Blanca phase 2 (QB2) project.
"With the highly competitive QB2 project finance facility in place and the recent closing of the QB2 partnering transaction, we are building considerable value for shareholders through the development of this world-class copper project," said Teck chief executive officer Don Lindsay. "QB2 will benefit from the ongoing decarbonization and electrification of the global economy."
"The additional share buyback announced today demonstrates our continued confidence in the business and reflects our balanced approach to capital allocation," added Mr. Lindsay. "Our strategy is straightforward. We are focused on running our high-quality zinc and steelmaking coal operations as efficiently and sustainably as possible, deploying the cash generated from these assets to grow our copper business and returning excess capital to shareholders."
Consistent with this strategy of prudent capital allocation and this focus on returning cash to shareholders, Teck also announced today that it will not proceed with the MacKenzie Redcap extension at the Cardinal River steelmaking coal operation. The operation is expected to close in the second half of 2020. As a result of the closure, the company expects to record an after-tax, non-cash impairment charge of approximately $40-million in the second quarter of 2019.
Teck's normal course issuer bid program authorizes Teck to purchase up to 40 million Class B subordinate voting shares through the period ending Oct. 9, 2019, of which approximately 13.6 million shares have been purchased to date. Teck intends to purchase shares opportunistically over this period, and will determine the timing and amount of any purchases, subject to the requirements of the issuer bid program.
About Teck Resources Ltd.
Teck is a diversified resource company committed to responsible mining and mineral development with major business units focused on copper, steelmaking coal, zinc and energy.
We seek Safe Harbor.
© 2020 Canjex Publishing Ltd. All rights reserved.