Teck May Choose to Issue Equity on Delayed Coal Recovery: BofA

Teck Resources (underperform, PT $11) may choose to issue equity vs draw available credit to protect investment grade rating, given protracted met coal price recovery, BofA analyst Oscar Cabrera writes.

  • TCK liquidity remains strong with C$1.4b in cash, C$3.6b in undrawn credit
  • Met coal recovery likely to be long-drawn due to “sticky” U.S., new Australian supply
  • Dundee said TCK could eventually shut down Coal Mountain ops as it produces lowest quality coal for co.
  • NOTE: Yday, Teck to Cut 3Q Output; Implementing Temp. Shutdown in 6 Sites
  • Yday, Teck decision shows how bad mkt has gotten, although it signals limited downside ahead: Cowen
  • NOTE: May 25, First Quantum reported full exercise of over-allotment of their equity offering, raising total of C$1.44b

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