Chinese government company spends $1.74B on Teck stock

A Chinese government companywillspend $1.74 billion to buynew stock issued by Canadian mining giant Teck Resources Ltd.

China Investment Corp. (CIC) said Friday that it has agreed to buy 101.3 million Teck Class B shares for $17.21 each.

That's a discount of about $1.30 a sharefrom Teck's last market price. Teck B closed unchanged at $18.50 on the TSX on Thursday.

Teck shares were up 50 cents to $18 in early trading on the TSX.

The purchase will give CIC 17.5 per cent of Teck's Class B stockand a6.7 per centvoting stake.

Teck will use the cash to pay down debt, the company said. It had nearly $18 billion in long- and short-term debton March 31.

Not only will the deal help the balance sheet, but Teck president and CEO Don Lindsay welcomed the relationship with "a major Chinese financial investor, with a deep understanding of China, the world's largest consumer of our principal products."

CIC said it is a "long-term passive investor." According to its website, CIC was set up in 2007 with $200 billion US in capital. It"maintains a strict commercial orientation and is driven by purely economic and financial interests," the website said.

CIC does not currently hold any Teck shares.

The deal is expected to close on or about July 14. CIC is making the purchase through a company set up for the purpose, Fullbloom Investment Corp.

Teck has been struggling to reorganize its finances since last year, when it took on billions of dollars ofdebt to buy Fording Canadian Coal Trustfor $14 billion. It has been selling assets and restructuringits debt.

Teck B shares have ranged between $3.35and $49.24 in the past year.