UPDATE 1-Teck Cominco lines up Fording debt but stock falls

(Adds details, stock prices. In U.S. dollars)

By Cameron French

TORONTO, Sept 29 (Reuters) - Teck Cominco (TCKb.TO) said on Monday it has lenders in place for the $9.8 billion in debt it will use to fund its $13.4 billion takeover of Fording Canadian Coal Trust FDG_u.TO, clearing the way for Fording unitholders to vote on the deal on Tuesday.

Teck's shares, however, fell 12 percent, as a souring outlook for base metals prices and uncertainty over global financial markets punished shares of major producers.

Along with Teck, Brazil's Vale (VALE5.SA) fell 7.8 percent, Anglo-Swiss miner Xstrata (XTA.L) dropped 17.5 percent, and Australia's BHP Billiton (BHP.N) was down 11.6 percent.

In a statement, Teck said it had completed syndication of the $4 billion senior term loan and a $5.8 billion bridge loan, and expects to enter definitive credit agreements by Tuesday.

Doubts about whether Teck would be able to raise the debt amid a financial crisis in the United States prompted a 30-percent selloff in Fording's shares two weeks ago. However, the stock rebounded quickly as the companies assured markets that raising the funds is not a problem.

The takeover will give Teck full ownership of the Elk Valley Coal Partnership, one of the top producers of coal used in the steelmaking process. Fording owns 60 percent of the trust, while Teck currently owns 40 percent.

Teck also owns 20 percent of Fording and has said it may sell that stake to help fund the takeover.

Analysts said they expect Fording shareholders to approve the deal.

"It's a slam dunk in this market," said John Hughes, an analyst at Desjardins Securities.

"Certainly the bets that were being made a week ago that the deal was not going to happen are not being made today."

Tony Robson, an analyst at BMO Capital Markets, said he didn't think the pressure on Teck's stock was due to concerns about Teck's ability to repay the debt.

"I think Teck has been able to show that it can repay half the debt within 24 months fairly adequately," he said.

"Elk Valley is a strong cash flow generator and we're pretty well assured of high (metallurgical) coal prices again at least for calendar 2009."

Teck is offering $82 in cash and 0.245 of a Teck share for each Fording unit. With Teck down $3.85 at $28.75 on the New York Stock Exchange on Monday, that valued each Fording unit at $89.04.