* To sell 17.2 percent stake to China Investment Corp
* To raise proceeds of C$1.74 bln
* Shares rise 3.2 percent
(Adds details. In U.S. dollars unless noted)
By Cameron French
TORONTO, July 3 (Reuters) - Canada's Teck Resources
will sell a 17.2 percent equity stake to state-owned
China Investment Corp through a private placement that will
raise C$1.74 billion ($1.5 billion) and help the miner pay down
debt, it said on Friday.
Teck, a top producer of zinc, copper, and metallurgical
coal, will sell 101.3 million shares at C$17.21 each, a 7
percent discount to Thursday's closing price of C$18.50 on the
Toronto Stock Exchange.
Despite the discount, Teck's shares rose 3.2 percent, or 60
Canadian cents to C$19.10 just after markets opened, the
biggest gain among base metals miners in Toronto.
The deal, which will give CIC a 6.7 percent voting stake in
the company, comes as Chinese companies have been taking
advantage of depressed resource prices buy stakes in producers
and lock in access to commodities, particularly oil.
However, the deal does not involve an offtake agreement,
and Teck said that CIC, a sovereign wealth fund, has said it is
acquiring the shares "for investment purposes as a long-term
passive financial investor" and has agreed to hold the stock
for at least a year after the deal closes in mid-July.
In a statement, Teck Chief Executive Don Lindsay said the
transaction was "an attractive opportunity for Teck to
establish a relationship with a major Chinese financial
investor, with a deep understanding of China, the world's
largest consumer of our principal products."
Lindsay said recently the company had talks with Chinese
officials last year over a possible deal to supply coal to
China's growing steel industry.
DEBT PAYDOWN
Vancouver, British Columbia-based Teck will use the
proceeds of the deal to cut bank debt. The miner took on nearly
$10 billion in debt last year to buy Fording Canadian Coal
Trust, which made it a top producer of metallurgical coal, or
coal used in the steelmaking process.
The company has sold some assets to pay down the debt, and
has said it planned to sell a 20 percent stake in its coal
business. Teck spokesman Greg Waller said the company still
plans to sell the minority stake in the coal business.
David Davidson, an analyst at Paradigm Capital, noted there
had been recent speculation that Teck would do some sort of
equity sale to pay down debt.
He said he doubted the deal would face Canadian regulatory
or government obstacles, as it is for an equity stake in the
company, rather than a piece of a particular asset.
"It doesn't get them any closer to a pound of zinc or a
tonne of coal," he said.
However, he said the deal would make it easier for Teck to
do future deals with Chinese companies.
"Any deal that does come along for a ... stake in Fording
or anything else Teck decides to sell, that approval process
(in China) has basically been taken care of," he said.
CIC was created in 2007 to manage part of China's foreign
exchange reserves for higher returns. The $200 billion fund has
invested $7.8 billion in Morgan Stanley and has also
invested in private equity fund Blackstone .
($1=$1.16 Canadian)
(Reporting by Cameron French; editing by Peter Galloway)
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