Teck comes close, but not close enough | Hotter Commodities

Teck Resources has called off a shareholder vote on its proposed separation at the last minute, saying it would instead pursue a more simplified plan in the future

The Teck shareholder vote would have required two-thirds of each of its A and B shareholders to vote in favor of the proposal, which would have split the company into separate entities for base metals and coal.

Going into the vote, Teck was assured it had the support of its A shareholders, comprised mainly of Japan’s Sumitomo Metal Mining Co and the Keevil family, largely through their joint ownership of the Temagami Mining Company.

What was unclear was whether it would secure two-thirds approval for the deal from its B shareholders, the largest of which has a 4.10% share of overall voting rights.

Many of the votes would have been made by proxy ahead of the annual general meeting, scheduled to take place in Vancouver at 3pm local time. Counting the proxies ahead of the AGM more than likely revealed the company hadn’t secured quite enough B votes to push its current proposal through.

Close, but not close enough.

Where this leaves things now remains to be seen.

Teck chief executive officer Jonathan Price said the company plans to pursue a “simpler and more direct separation” going forward while focusing on its organic growth in the interim.

Glencore’s bid – rejected once again by Teck as a “non-starter” – is still on the table, although is vehemently opposed by the board of the Canadian miner, as well as by a growing number of the country’s politicians.

Obviously, it is better for Teck to have called off the vote than to have lost it publicly. But it leaves the miner in a slightly more precarious position than previously, with the need to ensure its long-term B shareholders remain loyal.

Perhaps now is the time for the partnerships that the company has heralded post-separation to emerge.

If the long-term plan was to separate and then deal-make, Teck might need to reveal its hand.

A proposal in which the company splits and the separated entities individually merge, sell, partner or acquire other sector participants could be a more palatable option if shareholders were aware up-front.

In Hotter Commodities, special correspondent Andrea Hotter covers some of the biggest stories impacting the natural resources sector. Sign up today to receive Andrea’s content as it is published.

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