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Teck Resources to Spin Off Steelmaking Coal Business to Shareholders in $11.5 Billion Deal
- Client News
- February 21, 2023
Paul, Weiss is advising leading Canadian mining company Teck Resources Limited in the reorganization of its business into two independent publicly listed companies: Teck Metals Corp. and Elk Valley Resources Ltd. Under the deal, Teck Metals will become a premier producer of energy transition metals and Elk Valley will be a high-margin steelmaking coal producer with an enterprise value of $11.5 billion.
The deal will be structured as a spinoff of Teck’s steelmaking coal business through the distribution of Elk Valley common shares to existing Teck shareholders. During the transition period, Elk Valley will make payments to Teck in the form of royalties and preferred share redemptions, which will fund the expansion of Teck’s copper operations. Additionally, major steelmaking coal joint venture partners and customers Nippon Steel Corporation and POSCO will exchange their minority interests in Teck’s mines for 10% and 2.5% stakes in Elk Valley, respectively. Nippon will also invest $1.025 billion as part of the deal. The separation, via a plan of arrangement under the Canada Business Corporations Act, is expected to be completed in the second quarter of 2023, pending shareholder, court and TSX approvals.
The Paul, Weiss team includes corporate partners Christopher Cummings and Aaron Schlaphoff, and counsel Stephen Centa; tax partner David Mayo, and counsel Sarah Katz and Alyssa Wolpin; and antitrust counsel Marta Kelly.