Fitch Rates Teck's New $300MM and $450MM Notes 'BBB-'; Outlook Stable

NEW YORK--(BUSINESS WIRE)--Fitch Ratings has assigned a 'BBB-' rating to Teck Resources Limited's (Teck; NYSE: TCK; TSE: TCKb) new $300 million senior unsecured notes due 2017 and $450 million senior unsecured notes due 2040. Proceeds of the notes are to be used to fund the company's offer to purchase up to $800 million aggregate principal amount of existing notes due 2014 and 2016.

Fitch currently rates Teck as follows:

--Issuer Default Rating (IDR) 'BBB-';

--Senior unsecured notes 'BBB-'.

The Rating Outlook is Stable.

In the second quarter of 2010, under the terms of the notes, Teck released and discharged the senior secured pledge bonds that secured the notes and the guarantees and liens supporting those pledge bonds.

The ratings reflect Teck's leading low cost position in zinc, its leading position in the seaborne hard metallurgical coal market, and solid core position in copper.

Pro forma for the transaction, Fitch estimates cash at quarter end would have been C$501.1 million and scheduled debt maturities would have been C$61 million in 2011, C$303 million in 2012, C$8 million in 2013 and C$762 million in 2014. Liquidity remains strong with cash on hand, free cash flow of C$746 million in the first half of the year and roughly C$1.2 billion available under credit facilities. Recently, Teck increased the size of its syndicated revolving credit to $1 billion and extended its maturity by one year to 2014.

Fitch expects free cash flow of at least C$1.1 billion in 2010 and funds from operations (FFO) adjusted leverage to be less than 2.5 times (x) on average over the next 24 months.

Teck does have several development opportunities and therefore capital spending is expected to remain high if the outlook for commodities prices remains favorable.

The Stable Outlook reflects Fitch's view that Teck will maintain its current financial profile.

A negative rating action could follow from a leveraged acquisition or other recapitalizing event. A positive rating action could follow further sustainable reduction in financial leverage.

Additional information is available at 'www.fitchratings.com'.

Applicable criteria available on Fitch's web site at 'www.fitchratings.com' include:

-- 'Rating Mining Companies', March 12, 2010.

-- 'Corporate Rating Methodology', Aug. 13, 2010.

-- 'Evaluating Corporate Governance', Dec. 12, 2007.

-- 'Liquidity Considerations for Corporate Issuers', June 12, 2007.

Related Research:

Rating Mining Companies - Sector Credit Factors

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=503932

Evaluating Corporate Governance

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=363502

Corporate Rating Methodology

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=546646

Liquidity Considerations for Corporate Issuers

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=328666

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE.