DBRS Comments on Teck Resources’ Amended Credit Agreement

DBRS notes that Teck Resources Limited (Teck or the Company) today announced the execution of definitive amended and restated credit agreements and related documents, giving effect to the bridge and term loan extension announced on April 21, 2009. DBRS had expected that the agreement announced would be completed; hence today’s announcement has not changed Teck’s ratings or trend.

DBRS downgraded Teck’s Unsecured Debentures to BBB (low) from BBB and maintained a Negative trend on April 27, 2009. This rating action reflected Teck’s weakened financial risk profile, the Company’s high debt levels and DBRS’s outlook for poorer than previously expected commodity markets, particularly for steel-making coal.

The amendments to the bridge and term loans will serve to reduce the size of Teck’s 2009 funding requirements of US$6.3 billion to approximately US$1.8 billion. With $1.6 billion cash on hand and approximately $1.1 billion in unutilized credit facilities at the end of the first quarter of 2009, DBRS expects that the amendments will allow Teck to adequately meet the revised maturity obligations in 2009. DBRS remains of the view that amendments to Teck’s credit agreements and related documents will only partially resolve its liquidity concerns and will add to financing cost through extension fees of approximately US$96 million and higher interest costs. DBRS expects additional reductions of the bridge facility through asset sales or term refinancing to occur during the year, such as the Company’s April 30, 2009, announcement of an agreement to sell its 40% interest in the Pogo mine in Alaska for US$245 million.

The rescheduling of maturities is a positive development for Teck, but the Company continues to face serious challenges in reducing its debt levels in the current market environment. The outlook for 2009 operating cash generation is modest and is subject to the greater-than-normal uncertainty in the current economic climate. Additionally, higher interest costs on refinanced debt will put further pressure on coverage metrics. Accordingly, Teck’s ratings remain on Negative trend with the possibility of further negative rating actions.

For more information on Teck, please see the DBRS press releases published on April 27, 2009 and February 17, 2009.

Notes:
All figures are in Canadian dollars unless otherwise noted.

The applicable methodology is Rating Mining, which can be found on our website under Methodologies.

This is a Corporate rating.