The Successful Investor Hotline – Friday, November 14, 2008

Article Excerpt

TECK COMINCO LTD. $6.35, Toronto symbol TCK.B, fell 50% this week largely due to concerns over its ability to carry a $5.8 billion U.S. short-term loan it used to finance its recent $15.0 billion U.S. takeover of Fording Canadian Coal Trust. That loan itself is now equal to roughly 2.3 times Teck’s market cap. Falling prices for zinc, copper and gold could hurt Teck’s ability to quickly repay the new debt. The company may have to cut or eliminate its $1.00 dividend, which now yields a high 15.7%. It may also have to issue new shares at depressed prices. Teck feels it can pay down a big part of this loan in 2009. It will receive a $1 billion (Canadian) tax refund on the Fording transaction. It also plans to raise cash by selling some of its operations. This could include its gold mining businesses. As well, Teck will delay capital spending on several new projects. The company also now has 100%…