A sovereign wealth fund of the People's Republic of China has invested $1.74 million into Vancouver's Teck Resources Ltd. (TSX.TCK.B).
As part of the deal, a subsidiary of China Investment Corp. (CIC), which manages part of China's foreign exchange reserves, is acquiring 101.3 million Class B Teck shares for $17.21 per share.
Proceeds of the deal with Fullbloom Investment Corp. will be used to reduce Teck's outstanding bank debt accumulated from its $14.1 billion acquisition of Fording Canadian Coal Trust last year.
Don Lindsay, Teck's president and CEO said, "This transaction will have an immediate and very positive effect on Teck's balance sheet and represents an attractive opportunity for Teck to establish a relationship with a major Chinese investor."
As a result of the deal, CIC will own 17.2% of Teck's equity and 6.7% of the company's voting rights. Teck's Class A shareholders, however, will hold a 61.8% voting stake in Teck. Temagami Mining Company Ltd. holds a 28.5% voting interest.
CIC said it's acquiring Teck's Class B shares for investment purposes as a long-term and passive financial investor and has agreed to hold the shares for at least a year following completion of the deal, which is expected in mid-July.
CIC has also agreed that after the one-year hold period, it will not sell the shares to another mining company or to a material customer of Teck.
Teck's share price range during the past week: between $18.47 and $19.13; 52-week high: $49.24; 52-week low: $3.35.