Fording Canadian Coal Trust is an open-ended mutual fund trust. The Trust was formed by way of a plan of arrangement effective February 28, 2003. Through investments in metallurgical coal and industrial minerals mining and processing operations, the Trust makes quarterly cash distributions to unitholders. The Trust, through its subsidiaries, has a 61% interest in Elk Valley Coal Partnership, and is the world’s largest producer of the industrial mineral wollastonite. Elk Valley Coal Partnership is the world’s second largest exporter of metallurgical coal, supplying high-quality coal products to the international steel industry. Elk Valley Coal Partnership also owns a 46% interest in Neptune Bulk Terminals (Canada) Ltd.
Elk Valley Coal Partnership was initially owned 65% by Fording Canadian Coal Trust and 35% by Teck Cominco, the managing partner. The agreement governing Elk Valley Coal Partnership provided for an increase in Teck Cominco’s interest to a maximum of 40% to the extent that synergies from the combination of various metallurgical coal assets contributed to Elk Valley Coal Partnership exceed certain target levels. The report of an independent expert engaged by the partners concluded that sufficient synergies had been realized to increase Teck Cominco’s interest to 40%.
The Trust and Teck Cominco considered the report of the independent expert and agreed substantial synergies were achieved. As a result, the partners agreed that the Trust’s distribution entitlement will reduce to 62% effective April 1, 2004, to 61% on April 1, 2005, and to 60% on April 1, 2006. Teck Cominco’s entitlements will increase correspondingly over the same period.
To learn more about the formation of the Fording Canadian Coal Trust, refer to the Third Supplement to the Management Information Circular for the Special Meeting of Fording shareholders. Click here to go directly to the document, or see our Reorganization Archives for a complete list of the documents relating to the Trust reorganization.
