By Lisa Kerner
Charlotte, N.C., July 29 - Fording Canadian Coal Trust agreed to sell all of its assets to Teck Cominco Ltd. and to distribute the proceeds to Fording unitholders through a plan of arrangement valued at C$14.1 billion.
The sale is the culmination of an extensive review of strategic alternatives, Fording noted.
According to a Fording news release, the company's unitholders will receive $82.00 cash and 0.245 of a Teck Cominco class B subordinate voting share per Fording unit.
The $82.00-per-unit cash payment includes a final distribution of $3.00 per unit.
Fording said the total per-unit value is $91.66, or C$93.76.
The weighted average trading price of the Teck Cominco shares on the Toronto Stock Exchange for the 20 trading days ended July 28 was C$41.90.
A termination payment of $400 million, payable by Fording to Teck Cominco, is included in the arrangement.
In addition, Teck Cominco agreed to pay up to C$10 million in transaction costs if the transaction is not approved by Fording's unitholders and in certain other circumstances.
Teck Cominco entered into a debt commitment letter with a syndicate of banks to borrow $9.8 billion to finance a portion of the transaction. Additional funding will come from the Vancouver, B.C.-based mining company's sale of 29.5 million Fording units subsequent to the Fording unitholder meeting, according to the release.
Fording unitholders are expected to meet in late September, with the transaction slated to close in late October.
The Fording units will be delisted from the TSX and the New York Stock Exchange once the transaction is completed.
Teck Cominco holds approximately 19.9% of the units of Fording and is the managing partner of the Elk Valley Coal Partnership, the metallurgical coal business from which Fording receives substantially all of its cash flow, the release stated.
"Consolidation of the ownership of Elk Valley Coal is a logical step, particularly in light of recent strength in metallurgical coal prices, as well as the need to address our income trust structure before 2011," Michael Grandin, chair of the independent committee of the Fording trustees, said in the release.
The Fording trustees and directors were advised by RBC Capital Markets, which also provided a fairness opinion.
Fording, located in Calgary, Alta., is an open-ended mutual fund trust and one of the largest royalty trusts in Canada.
| Acquirer: | Teck Cominco Ltd.
|
| Target: | Fording Canadian Coal Trust
|
| Announcement date: | July 29
|
| Transaction total: | C$14.1 billion
|
| Price per share: | $82.00 cash and 0.245 of a Teck Cominco class B subordinate voting share
|
| Termination fee: | $400 million
|
| Expected closing: | Late October 2008
|
| Stock price for acquirer: | NYSE: TCK: $39.43 on July 28
|
| Stock price for target: | NYSE: FDG: $82.49 on July 28
|
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