The debentures will be issued in denominations of $1,000, and each will be exchangeable into 42.5 shares of
“We believe Cominco is a good-value investment” says John Taylor, senior vice-president of Teck. He adds that Teck has no immediate plans to buy more Cominco stock.
The debentures can be exchanged by the holder or redeemed by Teck at any time. If they are redeemed within seven years from the date of issue, Teck will pay a premium of $112 per debenture, which will decline to $19 in by the seventh year.
Upon redemption or exchange of a debenture, Teck has the option of either delivering 42.55 Cominco shares or issuing either Teck Class B subordinate voting shares of equivalent value or the equivalent in cash.
Once the deal is closed, Teck will purchase a minimum of 1 million Cominco shares and attempt to procure up to an additional 500,000 shares. If all shares are acquired, Teck will own 34.5 million Cominco shares, about 40.4% of the company’s outstanding shares.
If Teck purchases more than 1 million Cominco shares, the underwriters will have the option of purchasing, pro rata, up to an additional $25 million of debentures.
The transaction is expected to generate $99 million in proceeds. The securities will not be offered in the U.S., nor will they be sold to American citizens.
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