Shareholders in diversified miner Teck Resources should vote against the Canadian company’s separation plan, Institutional Shareholder Services (ISS) said on Thursday.
Although the separation into Teck Metals and Elk Valley Resources (EVR) creates a pathway for shareholders to be unwound from their interest in steelmaking coal assets, it introduces “structural issues and uncertainties”, the proxy advisory firm said.
ISS noted that nonapproval of the separation plan appeared unlikely to result in the board accepting Swiss commodities giant Glencore’s unsolicited proposal, thus making Teck’s current status quo the most probable outcome in the near term.
“Teck’s status quo does not seem to offer a poor result for shareholders, given the company’s track record and the fact that shareholders will retain optionality to enter into another transaction in the future, which could provide more advantageous terms.
“Accordingly, the shareholders are recommended to vote against the proposal,” said ISS.
Glencore has sweetened its offer for Teck by adding $2.8-billion in cash to sway investors who are nervous about their exposure to coal. The board of Teck on Thursday rejected the proposal and tweaked its own restructuring plans to include a potentially shorter path to fully separate the company into Teck Metals and coal miner EVR.