VANCOUVER,
BRITISH COLUMBIA--(Marketwire - April 21,
2009) - Teck Cominco Limited ("Teck") (TSX:TCK.A and TCK.B, NYSE:TCK)
announced today that it has entered into a commitment letter to amend
its existing US$4 billion senior term loan facility (the "Term Facility")
and US$5.81 billion senior bridge loan facility (the "Bridge
Facility", and together with the Term Facility, the
"Facilities"). The lenders have agreed, on the conditions set
out in the commitment letter, among other things, to:
- defer US$4.4 billion of payments previously scheduled in 2009,
- extend the maturity date of US$3.5 billion of the Bridge Facility
from October 29, 2009 to October 30, 2011, and
- reschedule approximately US$3.3 billion of amortization payments
under the Term Facility, with 50% of that rescheduled amount payable in
quarterly installments during 2012
Teck President and Chief Executive Officer
Don Lindsay said: "This rescheduling of our bridge and term debt
will give Teck the time to most effectively
execute our asset sales program to significantly reduce our current
debt and to access the debt capital markets to replace short term debt
obligations with longer term financing more appropriate to our
portfolio of long-life assets."
Under the commitment letter, Teck will be
required to reduce the approximately US$5.2 billion currently
outstanding under the Bridge Facility to US$3.5 billion by October 30,
2009, with the remaining amounts outstanding under the Bridge Facility
being due October 30, 2011. Changes to the existing amortization
schedule under the Term Facility will be subject to individual lender
consent, with holders of 83.6% of the Term Facility loans having
provided commitments under the commitment letter. Based on the
commitments of the holders of 83.6% of the Term Facility loans, semiannual amortization payments of US$418 million
will be due at the end of April and October of 2010 and 2011 and
quarterly payments of US$418 million will be due at the end of each
calendar quarter in 2012.
On the amendments becoming effective, the remaining mandatory payments
previously due by October 30, 2009 will be reduced from US$6.3 billion
to approximately US$1.9 billion. The table below summarizes the
mandatory payments on the Facilities before and after the amendments.
(in billions of U.S. dollars) 2009 2010 2011 2012 Total ---------------------------------------------------------------------------- Pre-amendment mandatory payments $ 6.274 $ 1.455 $ 1.454 $ - $ 9.183 Increase (decrease) (4.412) (0.380) 3.120 1.672 - ---------------------------------------------------------------------------- Amended mandatory payments $ 1.862 $ 1.075 $ 4.574 $ 1.672 $ 9.183 ---------------------------------------------------------------------------- ----------------------------------------------------------------------------
The amended Bridge Facility interest
rate will initially increase from LIBOR plus 2.50% to LIBOR plus 3.50%
and then increase by 0.50% every six months thereafter. Duration fees
on the outstanding balance of the loan will be payable every six months
at the rate of 3.50% if the outstanding balance exceeds US$3.35 billion
or at the rate of 2.50% if the balance is equal to or less than US$3.35
billion. The interest rate in respect of the amended portion of the
Term Facility will increase from LIBOR plus 2.50% to LIBOR plus 3.50%
through 2011 and then increase to LIBOR plus 5% in January, 2012. Lenders
under the Term Facility who do not agree to reschedule their
amortization payments will receive 11 equal quarterly payments
beginning April 30, 2009. Teck will pay
extension fees of approximately US$96 million in connection with the
amended Facilities, a portion of which may be refundable if the Bridge
Facility balance is reduced beyond certain specified thresholds within
specific time periods in 2009.
The obligations of Teck under the Facilities
will be guaranteed by Teck Cominco Metals
Ltd., Teck Cominco Coal Partnership, and all
other subsidiaries of Teck, subject to
certain exceptions, and will be secured by a first priority security
interest in all of the material properties of Teck
and each guarantor, with provision for the release of the security
interest in connection with permitted asset sales. The security will
fall away upon full repayment of the Bridge Facility and Teck receiving investment grade credit ratings with
stable outlooks from both Moody's and S&P. Teck's
existing bonds will be secured pari passu to the extent required under the negative
pledge in the relevant trust indenture.
The Bridge Facility will be required to be prepaid in an amount equal
to 100% of the net proceeds from asset sales or the incurrence or
issuance of new debt or equity (subject to mutually agreed exceptions),
as well as 100% of the net proceeds received from tax refunds
associated with the Fording acquisition. Any proceeds from asset sales,
capital market transactions and/or operating cash flow must be applied
to the Bridge Facility balance, subject to a minimum cash balance of
CdnS$500 million, deductions for certain environmental and reclamation
obligations and funds placed in escrow, if any, to meet the next
scheduled Term Facility amortization payment. Once all amounts
outstanding under the Bridge Facility have been paid in full, the Term
Facility will also be subject to prepayment requirements in respect of
asset sales proceeds, new debt or equity and a cash
sweep to be agreed. As a consequence of the amendments, until the
Bridge Facility is repaid in full, a specified majority of Bridge
Facility lender affiliates will be entitled to issue a securities
demand to Teck, requiring Teck
to issue debt securities to refinance the Bridge Facility, on terms and
in amounts required by such lenders, subject to certain conditions and
limitations.
The amended Facilities will contain covenants in addition to those
contained in the original Bridge Facility and Term Facility, including
restrictions on new indebtedness, new liens, acquisitions and dispositions,
capital expenditures and distributions. The debt to total
capitalization covenant in Teck's current
credit agreements will be replaced in the amended Facilities with a
minimum interest coverage covenant and a maximum leverage covenant. Both
of these tests will be calculated at the end of each calendar quarter
based on EBITDA and interest expense for the previous twelve months.
The obligations of the lenders to amend the Term Facility and the
Bridge Facility pursuant to the commitment letter are subject to
various conditions, including the settlement and execution of
definitive financing documentation in form and substance satisfactory
to the lenders, the making of corresponding amendments to Teck's revolving and bilateral credit agreements,
the granting of first-priority security interests in the material
property of Teck and its guarantors, there
not having been a material adverse effect in respect of Teck, the payment by Teck,
as a prepayment of the Bridge Facility, of all tax refunds received by
it or any of its subsidiaries that are attributable to the Fording
acquisition, and other customary conditions precedent.
A copy of the commitment letter will be available on SEDAR at www.sedar.com and at the SEC website at www.sec.gov.
Forward-Looking Statements
This press release contains certain forward-looking statements within
the meaning of the United States Private Securities Litigation Reform
Act of 1995 and forward-looking information as defined in the
Securities Act (Ontario).
Forward-looking statements and information can be identified by the use
of words such as "expects", "intends", "is
expected", "potential" or variations of such words and
phrases or statements that certain actions, events or results
"may", "could", "should",
"would", "might" or "will" be taken,
occur, or be achieved.
Forward-looking statements involve known and unknown risks,
uncertainties and other factors, which may cause the actual results,
performance or achievements of Teck to be
materially different from any future results, performance or
achievements expressed or implied by the forward-looking statements. These
forward-looking statements include statements concerning the amendment
of the Bridge Facility and the Term Facility and the impact of that
amendment on Teck, as well as Teck's plans regarding asset sales and refinancings. These forward-looking statements
involve numerous assumptions, risks and uncertainties and actual
results may vary materially. These statements are based on a number of
assumptions, including, among others, assumptions regarding general
business and economic conditions and the satisfaction of the conditions
to the amendment of the Bridge Facility and the Term Facility. The
foregoing list of assumptions is not exhaustive. Events or
circumstances could cause actual results to differ materially.
Factors that may cause actual results to vary include, but are not
limited to, risks relating to changes in general economic conditions or
conditions in credit and financial markets, risks relating to the
settlement of definitive documentation and the fulfillment
of other conditions precedent to the effectiveness of the amended
Bridge and Term Facilities and other risk factors as detailed from time
to time in Teck's reports filed with Canadian
securities administrators.
Certain of these risks are described in more detail in the annual
information form of Teck and in its public
filings with Canadian securities administrators. Teck
does not assume the obligation to revise or update these
forward-looking statements after the date of this document or to revise
them to reflect the occurrence of future unanticipated events, except
as may be required under applicable securities laws.
About Teck
Teck is a diversified resource company
committed to responsible mining and mineral development with major
business units focused on copper, metallurgical coal, zinc, gold and
energy. Headquartered in Vancouver,
Canada,
its shares are listed on the Toronto Stock Exchange under the symbols
TCK.A and TCK.B and the New York Stock Exchange under the symbol TCK. Further
information about Teck can be found at www.teck.com.
Teck will hold an investor conference call to
discuss the commitment letter and its first quarter 2009 earnings
results at 11:00 AM Eastern time, 8:00 AM Pacific time, on Tuesday,
April 21, 2009. Media are invited to attend on a listen-only basis. A
live audio webcast of the conference call, together with supporting
presentation slides, will be available at Teck's
website at www.teck.com. The webcast will also be available at www.earnings.com. The webcast will be archived at www.teck.com until July 20, 2009 (approximately 90 days).
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