Teck to sell 17 percent stake to China for C$1.74 billion

By Cameron French and Euan Rocha

TORONTO (Reuters) - Teck Resources (TCKb.TO: Quote, Profile, Research) said on Friday it will sell a 17.2 percent equity stake to state-owned China Investment Corp in a deal that will help the Canadian miner pay down its debt while expanding China's portfolio of commodity investments.

China, the No.1 importer of iron ore, copper and other commodities, has been steadily buying stakes in overseas producers in a broad strategy aimed at securing supply for its burgeoning economy.

Teck, a top producer of zinc, copper and metallurgical coal, said CIC will acquire the 17.2 percent stake through a private placement that will raise C$1.74 billion ($1.5 billion).

"This transaction is an endorsement of Teck's future and provides an immediate and very positive impact on Teck's balance sheet," said Chief Executive Don Lindsay. "It puts Teck back on the growth track and allows us to deepen our relationship with the largest customer of our core products."

Vancouver, British Columbia-based Teck 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 shares rose 8.1 percent, or C$1.49 to C$19.99, 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 take advantage of depressed resource prices to buy stakes in producers and lock in access to raw materials.

The deal does not require government approval under Canada's foreign investment rules, which only review transactions when a foreign company takes control of a domestic firm.