OTTAWA -(Dow Jones)- Teck Cominco Ltd. (TCK) is looking to sell its 20% stake in the delayed Fort Hills oil sands development in northern Alberta, project partner UTS Energy Corp. (UTS.T) said Monday.
UTS, which earlier Monday urged shareholders to reject a C$617 million hostile takeover bid from Total SA (TOT), said the troubled Vancouver-based mining firm had started looking for buyers.
"Teck advised UTS of Teck's process to sell their working interest in the Fort Hills Partnership," UTS said in a presentation to shareholders. "Teck and its advisors separately advised that credible parties, including Total, were only interested in acquiring at least a 40% working interest."
Teck is laboring under a massive debt burden after the acquisition of Fording Canadian Coal Trust late last year. Analysts have speculated that its Fort Hills stake could be among the asset sales being considered to help pay off a C$5.8 billion bridge loan, which is due in October.
"We're keeping our options open with respect to asset sales but beyond that we can't comment," Teck spokeswoman Sarah Goodman said.
Total announced its bid for UTS two weeks ago, eyeing the company's 20% stake in Fort Hills, the first takeover attempt in Alberta's oil sands industry since oil prices and market values plunged last year. The French oil major said it is already looking at "the possibility of acquiring an additional interest" in Fort Hills, which analysts saw as interest in Teck's stake, and potentially a slice of project leader Petro-Canada's (PCZ) interest as well.
Goodman declined to comment on whether Total had already approached Teck.
The French oil major's opening salvo for UTS prompted anger from board members and several major shareholders, who announced their intention of rejecting the C$1.30 a share offer.
In a statement earlier Monday, the chairman of the company's boardof directors called it an "inadequate and opportunistic offer that fails to recognize the full value of UTS."
UTS said C$3.57 a share is a more accurate reflection of its value.
The company has created a special board committee to look at alternatives, and has opened a data room in the hopes of attracting a rival bid.
Petro-Canada has already ruled itself out of making a counterbid for UTS. Both companies have right of first refusal on Teck's Fort Hills stake, but Petro-Canada spokesman Peter Symons reiterated that the company is "satisfied with our 60%."
"We don't see that changing anytime soon," he added. "We're sitting back and watching at this point - there's really not that much to say until the dust settles."
UTS shares closed 5.9% higher at C$1.80 on the Toronto Stock Exchange after languishing around the C$0.80-mark before Total's offer. Last summer, the stock peaked above C$6 a share.
-By Hyun Young Lee, Dow Jones Newswires; 613-237-0669; hyunyoung.lee@dowjones.com