The result of the vote to determine the future of Teck Resources Ltd. TECK-B-T remained unknown on Tuesday, suggesting that the outcome was too close to call only one day ahead of a shareholders’ meeting that the Vancouver company hopes to use to formally launch its breakup plan.
A source close to Teck said that the company’s senior executives remained in the dark at noon Pacific time as to which way the vote would go, and nothing could be assumed at that point. The Globe and Mail is not identifying the source, who is not authorized to speak on behalf of the mining company.
Teck would not comment. Glencore PLC GLNCY, the Swiss commodities giant that pitched an offer last month to merge with Teck, was equally in the dark on Tuesday about the voting results.
Shareholders were asked to approve a plan that would see Teck, Canada’s biggest diversified mining company, split itself in half, creating separate metals and metallurgical coal businesses, each with its own stock market listing.
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To put its plan into motion, Teck needs two-thirds of each of the supervoting class A shares (with 100 votes apiece) and the single-vote class B shares. The former are controlled by Teck chairman emeritus Norman B. Keevil and Japan’s Sumitomo. The latter are widely held and represent the bulk of the company’s equity.
The lack of an outcome suggests that the Teck is scrambling for “yes” votes in an effort to secure approval for its radical restructuring plan. What remained unknown on Tuesday was the voting intentions of China Investment Corp., the sovereign wealth fund that owns 10.3 per cent of Teck’s B shares. Were CIC to reject Teck’s split proposal, Teck would find it exceedingly difficult – perhaps impossible – to win its two-thirds majority.
Kingsdale Advisors is responsible for tallying the votes and reporting the results to Teck. The Globe reported on Monday that owing to various administrative snafus, there is a significant lag between receiving the votes and calculating the scorecard.
The proxy deadline to get votes in was noon PDT on Monday. After that point, it is up to Teck chair Sheila Murray to decide whether to accept any new votes.
Investors who owned stock on the record date of March 7 are eligible to vote. Some investors have been “overvoting” their shares by voting holdings they acquired after the record date. Investors who have not voted yet are eligible to cast votes if they attend the shareholders’ meeting on Wednesday.
Investors were allowed to change their vote up until the proxy deadline, but the tally was not reflecting in real time any such “flipped” votes. A lag time means that flipped votes may not enter the ledger until several hours later.
In addition, at least one major shareholder said that its vote wasn’t recorded accurately, adding to the confusion behind the scenes. Canada Pension Plan Investment Board’s vote originally showed up as a no vote on its website. It has since been switched to a yes vote. Frank Switzer, a spokesperson with CPPIB, said that the pension fund’s vote was inputted incorrectly owing to a “technical error.” CPPIB owns a 0.23-per-cent stake in Teck.
If Teck feels it has lost the vote, it is unlikely to hold the meeting and suffer the embarrassment of a public failure. In that case, Teck would be expected to postpone the vote.
Glencore has said that it is prepared to improve its US$23-billion merger offer, representing a 22-per-cent premium, if the vote goes against Teck. Glencore wants to meld its base metals operations with those of Teck, then create a separate company that would hold Teck’s and Glencore’s metallurgical and thermal coal operations.
Eric Reguly
Niall McGee