The Successful Investor Hotline – Friday, July 3, 2009

Article Excerpt

TECK RESOURCES LTD., $19.99, Toronto symbol TCK.B, will sell 101.3 million class B subordinate-voting shares (one vote per share) at $17.21 each to China Investment Corp., a sovereign wealth fund controlled by the Chinese government. Teck is selling these shares for 13.9% below the current market price. That’s because China Investment agreed to certain conditions, including holding onto these shares for at least a year and not selling them to one of Teck’s main rivals or customers. Despite the discount, Teck’s shares rose 8% on the news. That’s because Teck will put the $1.7 billion proceeds from the sale toward the $9.8-billion U.S. it borrowed to finance its $13.6-billion (Canadian) purchase of Fording Canadian Coal Trust last October. After the sale closes around July 14, China Investment Corp. will own 17.5% of Teck’s class B shares, and have a 6.7% voting interest. However, Teck insiders still control 61.8% of the votes through class A multiple-voting shares (100 votes per share). Teck…