Teck to shuffle $1bn debt, shave $55m off interest

Teck aims to save handsomely by redeeming expensive debt using proceeds from cheaper senior notes.

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HALIFAX, NS -

Teck (TSX: TCK.A, TCK.B; NYSE: TCK) plans to re-order $1 billion worth of loans, redeeming more expensive unsecured senior notes using funds from a cheaper debt issue.

Teck said it would raise $987 million by issuing two batches of senior notes. One half will bear three percent interest and mature in 2019. The other half will bear 5.2 percent interest and come due in 2042.

The proceeds from the new debt issue are to cover the cost of repaying pricier senior notes bearing about 10 percent interest and, on the whole, maturing sooner.

The shift to lower cost loans, Teck said, would save $55 million in interest payments a year.

Teck expects to close on the new notes by Feburary 28.

Meanwhile, the ratings agency Standard & Poor's gave the senior notes on issue a BBB rating, on par with Teck's existing debt.