Monday, May 8, 2023

Teck’s biggest shareholder,China Investment Corp., voted against company’s split: source

Teck’s biggest shareholder,China Investment Corp., voted against company’s split:source

TECK-B-T +0.58%increase
 Teck Resources Ltd.’s biggest shareholder, State owned/China Investment Corp., voted against the mining company’s proposed split last week, burying its chances of moving forward on a restructuring that had been years in the planning, a source familiar with the matter said.

Vancouver-based Teck last Wednesday announced it was cancelling its plans to separate, after failing to win enough votes from shareholders.

Teck needed at least two-thirds of votes cast by shareholders to be in favour for the split to succeed.

With a 10.3-per-cent stake in Teck’s single voting B shares, China Investment Corp. had an outsized influence on the outcome of the vote. CIC is a state-owned Chinese company, with direct ties to the Communist Party of China.

The Globe and Mail is not identifying the source because the person was not authorized to speak publicly.

Teck spokesperson Chris Stannell wrote in an e-mail to The Globe that the company is “unable to disclose any information about individual shareholder votes under applicable law.”

A timeline of the takeover bid for Teck Resources that captured the mining world’s attention

China hungers for Canada’s resources – that’s why CIC is flighty in Glencore-Teck tussle

Teck’s controlling shareholder, Norman B. Keevil, declined comment.

CIC did not respond to a request for comment.

A little more than a week before the annual meeting, Teck chief executive officer Jonathan Price had reassured the market that the company’s relationship with CIC was sturdy, and that he was confident of getting the vote of the Chinese sovereign wealth fund. The split would have seen Teck separate into Elk Valley Resources, holding its metallurgical coal mines, and Teck Metals, containing its copper and zinc mines.

But not only did CIC vote against Teck’s plans, it missed the proxy deadline to vote.

The Globe last week reported that CIC was in danger of missing the cutoff, which was 48 hours before the start of the annual meeting, and Teck’s advisers were baffled as to the reason.

After missing the deadline, it was up to Teck chair Sheila Murray to decide whether to accept CIC’s late vote.

The day before, and the morning of the annual meeting, Teck scrambled to try to flip shareholders like CIC who voted against the transaction into the “Yes” camp, but to no avail.

CIC first invested in Teck during the depths of the great financial crisis of 2008 and 2009, paying $1.7-billion for a 17.5-per-cent equity stake.

Over the years, CIC has sold down a significant part of its holdings, booking big profits on each occasion.

There had been signs ahead of the meeting that Teck’s relationship with its Chinese stakeholders was evolving.

Quan Chong, a former government of China representative, did not stand for re-election as a board member last week at Teck’s annual meeting.

Mr. Chong joined Teck amid public controversy in 2016, as he was an active deputy of the National People’s Congress of China at the time, raising concerns about the potential for Chinese interference into Canada’s biggest diversified mining company.

CIC’s “No” vote has left Teck increasingly vulnerable to a takeover by Glencore PLC 

GLNCY +0.60%increase
. The Swiss mining and commodities trading giant had encouraged Teck shareholders to vote down the split as a ploy to make it easier for it to acquire the company.

Following Teck’s failed split vote, Glencore reiterated that its US$22.5-billion takeover proposal, which was tabled last month, still stands. Glencore also indicated that if the Canadian miner’s board doesn’t engage, it may take its offer directly to shareholders.

If Glencore were to eventually win enough support from Teck’s B shareholders in a tender offer, it would still need the company’s A shareholders to be on board.

So far, Mr. Keevil and Japan’s Sumitomo Metal Mining Co., Ltd., who both control the A shares, have refused to entertain Glencore’s approach.

Open this photo in gallery:

Former B.C. Premier John Horgan greets Justin Trudeau

Former British Columbia premier John Horgan is taking a job in the coal industry, and says he is not worried about the criticism the move may draw.

Mr. Horgan, who before becoming premier was the B.C. New Democrats’ mining and energy critic, is joining the board of Elk Valley Resources, an enterprise that is in the process of being spun off from Vancouver-based Teck Resources Ltd. The new business will focus on producing coal used to make steel.

It’s a corporate turn for Mr. Horgan. Prior to stepping down as party leader last year, he had a major national profile as one of only a few New Democrats to have headed governments recently. He was also chair of the Council of the Federation, a group of premiers and territorial leaders who were making the case for the federal government to increase health care funding.

“I’ve got other things that I am going to be working on that may be more to the taste of those who would kick up some dust, but the people that are kicking up dust, oftentimes, kick it up for the sake of kicking it up,” Mr. Horgan said in an interview.

“I don’t have a lot of time any more, none in fact, for public comment on my world view, or what I am doing with my time. I don’t want to be snippy about it, but there are others that are making policy decisions.”

Mr. Horgan, 64, was premier from 2017 until this past November. He was the first B.C. New Democrat to win two terms in the role. Former attorney-general David Eby succeeded him as provincial NDP leader and Premier.

Mr. Horgan remained an MLA until Friday, when he officially resigned his seat in the B.C. legislature. He represented a Victoria-area riding.

He conceded there may be a “knee-jerk” reaction to his move to coal, but he noted there’s a difference between coal used to make electricity and coal used for metallurgy. While there are better ways to generate electricity, he said, there are not yet better ways to make steel.

In his new role, he said, he will be making sure that the company is meeting its obligations to workers, to First Nations, to the environment and to shareholders.

After enduring treatments for cancer, Mr. Horgan, 64, said his health is good and that he relishes the chance to learn in a new setting.

Elk Valley Resources will run four B.C.-based operations that are expected to produce a total of 25 to 27 million tonnes of metallurgical coal per year. The spinoff from Teck Resources is set to go before shareholders at a meeting on April 26.

Some investors are increasingly concerned about greenhouse-gas emissions from coal. Late last year, the International Energy Agency said global coal consumption was set to rise to an all-time high in 2022, and remain at those levels unless stronger efforts were made to move to a low-carbon economy.

Mr. Horgan said he had his first discussion about the assignment in December.

“When I was approached to join the board, everyone knew where I was coming from, and I think that speaks to EVR’s desire to meet my expectations and, by doing so, meet the expectations of the majority of British Columbians,” he said.

Marcia Smith, the chair of Elk Valley’s board, said Mr. Horgan will bring a depth of experience and a belief in responsible mining to the organization.

“We are fortunate to have him join the EVR board and look forward to having the benefit of his guidance as we establish this new world-class Canadian company,” she said in a statement.

Mr. Horgan said he is looking at other academic, corporate and philanthropic projects now that he has retired from politics.

“I don’t need the light to be shone upon me. I just want to do my level best to improve outcomes for everyone around me,” he said.

“That means collaboration and following the leadership that knows better than I, at this point, how to deal with some of the challenges ahead.”

No comments:

Post a Comment

Comments always welcome!