Teck To Spin Off Steelmaking Coal Business; Plans Dividend, Up To $250 Mln Buyback

(RTTNews) - Teck Resources Ltd. (TECK, TCK_A.TO) announced Tuesday the reorganization of its business to separate it into two independent, publicly-listed resource companies. The company plans to spin off steelmaking coal business to shareholders.

Separately, Teck declared a $0.625 per share dividend and said its Board authorized up to $250 million share buyback.

Regarding the reorganization, the company said the separation will create Teck Metals Corp. and Elk Valley Resources Ltd.

Teck Metals will be growth-oriented, with premier, low-cost base metals production, a top-tier copper development portfolio and a disciplined capital returns policy. Elk Valley Resources will be a high-margin Canadian steelmaking coal producer.

The Separation is structured as a spin-off of Teck's steelmaking coal business by way of a distribution of EVR shares to Teck shareholders. Teck Metals will retain a substantial interest in steelmaking coal cash flows through a transition period in the form of an 87.5% interest in a gross revenue royalty and preferred shares of EVR.

Under the Transition Capital Structure, Teck Metals will receive quarterly payments consisting of Royalty payments and preferred share redemption amounts that will in aggregate equal 90% of EVR free cash flow.

As part of the Separation, Teck will change its name to Teck Metals Corp. and continue to be listed on the Toronto and New York stock exchanges. EVR has applied to have its common shares listed on the TSX.

Teck also said it has reached agreement with its steelmaking coal joint venture partners and major customers, Nippon Steel Corp. and POSCO, to exchange their minority interests in the Elkview and Greenhills operations for interests in EVR.

Nippon Steel will pay Teck $1 billion in cash for interest in Elk Valley Resources.

Teck will seek shareholder approval of the Separation at its annual and special meeting of shareholders expected to be held on or about April 26.