Rising coal prices brighten Teck’s outlook

Article Excerpt

TECK RESOURCES LTD. $42 (Toronto symbol TCK.B; Conservative Growth Portfolio, Resources sector; Shares outstanding: 589.1 million; Market cap: $24.7 billion; Price-to-sales ratio: 2.7; No dividends paid since July 2008; SI Rating: Extra Risk) is a leading producer of metallurgical coal, a key ingredient in steelmaking. Coal accounted for 46% of Teck’s 2009 revenue, and 54% of its earnings. Teck also produces copper (28% of revenue, 31% of earnings) and zinc (26%, 15%). The company has reduced its total debt by $6.7 billion since it borrowed $9.8 billion U.S. to buy Fording Canadian Coal Trust in October 2008. Sales of gold mines and other assets helped Teck raise cash for debt repayments. As well, Teck sold $1.7 billion of class B subordinate-voting shares (which carry one vote per share) to a Chinese sovereign wealth fund. This fund now owns 17.5% of Teck’s class B shares, and has a 6.7% voting interest. Insiders still control 61.8% of Teck’s total votes through class A multiple…

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