Chinalco’s jilting by Rio Tinto has not changed China’s appetite for offshore assets.
Some commentators had wondered if the way Rio wriggled away from Chinalco’s embrace would cause China to rethink or go elsewhere.
It is still sniffing around Australian companies, with the latest, the Gindalbie-Ansteel deal wrapping up late last week with a series of board changes to reflect Ansteel’s 36% stake in Gindalbie.
Friday saw a state-owned investor buy 17% of the big Canadian miner, Teck Resources; a state-owned oil company confirm its interest in the Argentinian assets of a big Spanish oil company, and a Beijing-owned car company emerge with a late bid for the Opel car arm of General Motors in Germany.
Teck said it will sell a 17.2% stake to China Investment Corp in a deal that will help Teck cut down debt by raising $US1.5 billion.
Teck said the placement will see 101.3 million shares at C$17.21 each, a 7% discount to Thursday’s closing price of C$18.50 on the Toronto Stock Exchange.
Teck is a leading producer of zinc, copper, and metallurgical coal. CIC will acquire the stake through a private placement.
(CIC has invested more than $200 million in Goodman Group and stands to provide more, in exchange for lifting its stake in the Australian property group).
The deal will give CIC a 6.7% voting stake in Teck.
The deal provides China with no guaranteed share of Teck’s production. Teck said that CIC has said it is acquiring the shares "for investment purposes as a long-term passive financial investor." The fund has agreed to hold the stock for at least a year after the deal closes in mid-month (Source).
"CIC has also agreed that after the one year hold period, it will not sell the purchased shares to a participant in the worldwide mining, metals or minerals industries, or to a material customer of Teck.
"In the event of a takeover bid for Teck, CIC will be permitted to tender its shares, provided that the bid has features associated with a “permitted bid” customary in Canadian shareholder rights plans, or is supported by the Teck board, and in certain other circumstances," Teck said in the statement.
CIC is a sovereign wealth fund and was created in 2007 to manage part of China’s foreign exchange reserves for higher returns.It hasn’t done very well, so far.
The $US200 billion fund plunged into deals with loss-making investments in Wall Street firms, Morgan Stanley and Blackstone.
Teck needs the money: it added around $US10 billion in debt last year to buy Fording Canadian Coal Trust, which made it a top producer of coking coal, which is used in steel making.
Teck has cut its dividend, laid off workers, sold $US1.5-billion in assets, restructured its loans, cut capital spending and issued $US4.2-billion in junk bonds to raise cash to reduce the loans from the Fording deal.
That deal was done at the top of the market, just as Rio bought Alcan for a top of the market price.
Meanwhile the state-owned China National Petroleum Corp (CNPC) is among bidders looking to buy the Argentinian unit of Spanish oil major Repsol.
Bloomberg said that Zhang Guobao, the vice chairman of China’s top planning agency, the National Development and Reform Commission, said CNPC was holding talks with Repsol.
Reuters also reported that CNPC, the country’s largest oil company, and the China National Offshore Oil Corp Ltd (CNOOC) were competing for Chinese government approval to bid for YPF, in a deal that could be worth around $US17 billion.
And state-owned Beijing Automotive (BAIC) revealed an indicative, offer for Opel.
The bid was leaked to the media ahead of a Friday deadline for GM lawyers to submit papers to US federal bankruptcy court which is to decide by July 10 on a plan to create a "new GM" with brands Chevrolet, Cadillac, Buick and truck unit GMC.
Canadian car parts group, Magna, backed by Russian partners, is the frontrunner to buy Opel, but a Belgian company RHJ International has emerged in the past two weeks as a third bidder, despite raising doubts by revealing a big loss and a shortage of cash.
Any business plans submitted will be evaluated by PriceWaterhouse Coopers on behalf of the German Government, since it will have to offer more state aid after already extending Opel a six-month 1.5 billion euro ($2.1 billion) bridge loan that matures on November 30.
Among the recent Chinese deals:
- July 2, 2009- Chinalco confirms it tipped $US1.5 billion into Rio Tinto’s rights issue
- July 2, 2009- Ansteel wraps up more than $A534 million to help finance a big iron ore project in WA and will emerge with a 36% stake in Gindalbie.
- June 30, 2009- China Sci-Tech Holdings completes $US211 million ($A261.3 million) purchase of the Martabe gold and sliver mine in Indonesia owned by OZ Minerals (See below).
- June 24, 2009 – Sinopec, China’s largest oil refiner, agreed to buy Swiss oil explorer Addax Petroleum Corp for $US7.24 billion, a deal that will give it access to oil areas in West Africa and Iraq.
- June 9, 2009 – Canadian mining and exploration company Consolidated Thompson said it had finalized terms of an agreement with China’
