DBRS Assigns BBB (low) Rating with Negative Trend to Teck Resources New Debt Issues

DBRS has today assigned a rating of BBB (low) with a Negative trend to Teck Resources Limited’s (Teck or the Company) US$1.315 billion 9.75% Senior Secured Notes due May 2014, US$1.06 billion 10.25% Senior Secured Notes due May 2016, and US$1.85 billion 10.75% Senior Secured Notes due May 2019 (collectively, the New Notes) that the Company has issued by way of private placement. The New Notes rank equally with Teck’s other senior secured indebtedness including: US$200 million 7.0% notes due September 2012; US$300 million 5.375% notes due October 2015; and US$700 million 6.125% notes due October 2035 (collectively, the Old Notes); as well as an approximate US$5.2 billion bridge loan facility and an approximate US$3.9 billion term loan facility. DBRS recently downgraded the Old Notes to BBB (low) from BBB (see April 27, 2009, press release). As Teck intends to use the net proceeds from the private placement to partially repay borrowings under its existing bridge credit facility, its leverage will remain unchanged and the issuance of the New Notes does not change the Company’s ratings or trend.

Teck has indicated that the New Notes will be secured by senior secured pledge bonds guaranteed by all of Teck’s subsidiaries that guarantee its credit facilities and bridge credit agreement, subject to certain exceptions. In addition, the Company’s obligations under the New Notes will be guaranteed on a senior unsecured basis by Teck’s subsidiaries that guarantee its obligations under its term and bridge facilities as amended April 30, 2009 (the Amended Facilities), subject to certain assets in respect of which third party consents are not obtained.

The New Notes and the guarantees will be first-priority senior obligations of Teck and its subsidiary guarantors, respectively, and will rank equally in right of payment with all existing and future senior indebtedness of the Company and its subsidiary guarantors, respectively; will be senior in right of payment to any future subordinated obligations of Teck and its subsidiary guarantors, respectively; and will be structurally subordinated to all the liabilities, including trade payables of the Company’s subsidiaries that do not guarantee the notes or that do not provide guarantees or security for the senior secured pledge bond.

The New Notes rank ratably with other indebtedness (including without limitation, the Amended Facilities) secured by other senior secured pledge bonds that secure the credit facilities and the bridge credit agreement.

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.