A visitor looks at a presentation by Teck Resources at the Prospectors and Developers Association of Canada annual conference, in Toronto, on March 1, 2020.Chris Helgren/Reuters
Teck Resources Ltd. TECK-B-T launched a sweeping overhaul of its corporate structure on Tuesday by announcing plans to spin off its coal business and end the founding Keevil family’s control of the country’s largest base metal mining company.
Vancouver-based Teck will ask shareholders to approve splitting off its British Columbia steelmaking coal mines, its largest business, into a company called Elk Valley Resources Ltd. The new company will be listed on the Toronto Stock Exchange. The parent company will own copper and zinc mines and be renamed Teck Metals Corp.
Teck earns the majority of its profit and free cash flow from selling coal to Asia-based steelmakers. After the spin off, Teck will continue to receive cash from the coal business for up to 11 years through royalty payments and ownership of $4-billion of preferred shares in Elk Valley. Teck predicts it will receive approximately $14-billion during this transition period, a payout that would increase if steelmaking coal prices rise.
“This transformative transaction creates two strong, sustainable, world-class mining companies committed to responsibly providing essential resources the world needs,” said Jonathan Price, Teck’s chief executive officer, in a press release. Mr. Price was named CEO in September and joined Teck in 2020.
Two of Teck’s steelmaking customers, Japan’s Nippon Steel Corp. and South Korea’s POSCO, will swap stakes in the company’s B.C. coal mines for minority holdings in Elk Valley. Nippon will pay Teck $1.025-billion for a 10-per-cent stake in both Elk Valley and a share in Teck’s future cash flow from the business. POSCO will own 2.5 per cent of the coal company and Teck’s cash flow agreement.
When listed, Elk Valley will be one of the world’s largest steelmaking coal companies, with a forecast market capitalization of $8-billion to $11-billion. Mr. Price said the decision to spin out the division, rather than sell it, came after years of review and negotiations with rival mining companies. Teck made coal its major business by acquiring Fording Canadian Coal Trust in 2008 for $14.1-billion.
Vancouver’s Keevil family currently controls Teck through ownership of class A shares that each carry 100 votes. On Tuesday, the company announced plans to convert the multiple voting shares into single-vote class B shares in six years. Analysts said the move will mean Teck, a mid-tier mining company by global standards, eventually becomes a takeover target.
“The sunset on the multiple voting rights will modernize Teck’s governance and provide a simplified and competitive capital structure, following an appropriate continuity period, which we believe will benefit Teck and all of its shareholders,” said Sheila Murray, chair of Teck’s board.
Owners of Teck multiple voting will initially receive one new class A common share and 0.67 of a Class B share. In six years, the new class A shares will convert into class B shares on a one-for-one basis. Analysts said the final step in the process would mean existing minority shareholders face “minimal dilution” of just 1 per cent of their current ownership.
“The proposed structure is an elegant solution to creating an attractive copper growth focused (and ESG friendly) company via Teck Metals that will continue to benefit from elevated near-term steelmaking coal free cash flow,” said analyst Orest Wowkodaw at Scotiabank in a report.
“In our view, the removal of the dual-class share structure is a positive governance initiative,” said Mr. Wowkodaw. “However, this change also makes the company potentially vulnerable to a future acquisition.”
Teck shareholders are expected to vote on the proposals at the company’s annual meeting in April and the spin out is expected to be completed in the second quarter of 2023. Investment banks Origin Merchant Partners and BMO Capital Markets advised Teck on the restructuring.
On Tuesday, Teck also announced record financial results for 2022, along with plans to buy back up to $250-million of its own shares this year. The company’s profit attributable to shareholders was $4.1-billion last year, compared to $2.9-billion in 2021, as revenues increased to $17.3-billion from $12.8-billion.
HALIFAX – Ottawa is negotiating a $500-million bailout for Nova Scotia’s privately owned electric utility, saying the money will be used to prevent a big spike in electricity rates.
Federal Natural Resources Minister Jonathan Wilkinson made the announcement today in Halifax, saying Nova Scotia Power Inc. needs the money to cover higher costs resulting from the delayed delivery of electricity from the Muskrat Falls hydroelectric plant in Labrador.
Wilkinson says that without the money, the subsidiary of Emera Inc. would have had to increase rates by 19 per cent over “the short term.”
Nova Scotia Power CEO Peter Gregg says the deal, once approved by the province’s energy regulator, will keep rate increases limited “to be around the rate of inflation,” as costs are spread over a number of years.
The utility helped pay for construction of an underwater transmission link between Newfoundland and Nova Scotia, but the Muskrat Falls project has not been consistent in delivering electricity over the past five years.
Those delays forced Nova Scotia Power to spend more on generating its own electricity.
This report by The Canadian Press was first published Sept. 16, 2024.
TORONTO – Roots Corp. may have built its brand on all things comfy and cosy, but its CEO says activewear is now “really becoming a core part” of the brand.
The category, which at Roots spans leggings, tracksuits, sports bras and bike shorts, has seen such sustained double-digit growth that Meghan Roach plans to make it a key part of the business’ future.
“It’s an area … you will see us continue to expand upon,” she told analysts on a Friday call.
The Toronto-based retailer’s push into activewear has taken shape over many years and included several turns as the official designer and supplier of Team Canada’s Olympic uniform.
But consumers have had plenty of choice when it comes to workout gear and other apparel suited to their sporting needs. On top of the slew of athletic brands like Nike and Adidas, shoppers have also gravitated toward Lululemon Athletica Inc., Alo and Vuori, ramping up competition in the activewear category.
Roach feels Roots’ toehold in the category stems from the fit, feel and following its merchandise has cultivated.
“Our product really resonates with (shoppers) because you can wear it through multiple different use cases and occasions,” she said.
“We’ve been seeing customers come back again and again for some of these core products in our activewear collection.”
Her remarks came the same day as Roots revealed it lost $5.2 million in its latest quarter compared with a loss of $5.3 million in the same quarter last year.
The company said the second-quarter loss amounted to 13 cents per diluted share for the quarter ended Aug. 3, the same as a year earlier.
In presenting the results, Roach reminded analysts that the first half of the year is usually “seasonally small,” representing just 30 per cent of the company’s annual sales.
Sales for the second quarter totalled $47.7 million, down from $49.4 million in the same quarter last year.
The move lower came as direct-to-consumer sales amounted to $36.4 million, down from $37.1 million a year earlier, as comparable sales edged down 0.2 per cent.
The numbers reflect the fact that Roots continued to grapple with inventory challenges in the company’s Cooper fleece line that first cropped up in its previous quarter.
Roots recently began to use artificial intelligence to assist with daily inventory replenishments and said more tools helping with allocation will go live in the next quarter.
Beyond that time period, the company intends to keep exploring AI and renovate more of its stores.
It will also re-evaluate its design ranks.
Roots announced Friday that chief product officer Karuna Scheinfeld has stepped down.
Rather than fill the role, the company plans to hire senior level design talent with international experience in the outdoor and activewear sectors who will take on tasks previously done by the chief product officer.
This report by The Canadian Press was first published Sept. 13, 2024.
VANCOUVER – Mediated talks between the union representing HandyDART workers in Metro Vancouver and its employer, Transdev, are set to resume today as a strike that has stopped most services drags into a second week.
No timeline has been set for the length of the negotiations, but Joe McCann, president of the Amalgamated Transit Union Local 1724, says they are willing to stay there as long as it takes, even if talks drag on all night.
About 600 employees of the door-to-door transit service for people unable to navigate the conventional transit system have been on strike since last Tuesday, pausing service for all but essential medical trips.
Hundreds of drivers rallied outside TransLink’s head office earlier this week, calling for the transportation provider to intervene in the dispute with Transdev, which was contracted to oversee HandyDART service.
Transdev said earlier this week that it will provide a reply to the union’s latest proposal on Thursday.
A statement from the company said it “strongly believes” that their employees deserve fair wages, and that a fair contract “must balance the needs of their employees, clients and taxpayers.”
This report by The Canadian Press was first published Sept. 12, 2024.
:format(jpeg)/cloudfront-us-east-1.images.arcpublishing.com/tgam/DNL5R6UL25NHHMA5FD2KUK4BUE.JPG)
