Toronto — The biggest company in Canada is getting smaller. On purpose. Canadian Pacific will pocket $472.1 million (Canadian) for its 53 percent stake in Cominco, a huge mining company based in British Columbia. The company bought Cominco shortly after it built the first rail line across Canada 101 years ago.
In addition to the cash for selling Cominco, Canadian Pacific gets rid of $935 million of debt and bank loans that are now the property of the new owners. That should brighten up CP's balance sheet.
CP is selling 31 percent of Cominco to a group led by Teck Corporation, a mining group based in Vancouver, British Columbia. Teck is confident it can make money where Canadian Pacific made losses.
``It is hoped,'' a joint statement said, ``that Cominco can resume its historic level of profitability.''
The remaining 22 percent of the shares are being sold to three Toronto-based brokerages, which will sell them to the public.
Cominco, with revenue of $1.46 billion in 1985, is the second-largest mining group in Canada, after the giant Inco. Cominco produces zinc, lead, copper, silver, and gold. It also has interests in chemicals and fertilizers.
Mining operations include the Sullivan, Pine Point, and Polaris mines, along with the Valley copper deposit in British Columbia and the Red Dog zinc, lead, and silver deposit in Alaska. The Red Dog is said to be the most valuable of its type in the world. But developing it would have meant a drain on the finances of the parent company, Canadian Pacific Ltd. The company can now deal with some of its other ailing subsidiaries.
Canadian Pacific's mining giant lost $71 million last year; total losses for the past 4 years were $180 million. That is why CP finally decided to bail out.
Canadian Pacific is the largest company in Canada in assets ($21.4 billion) and second largest in sales ($15 billion). Profits for 1985 were $246.7 million, down from $376.9 million in 1984. For the first six months of 1986 the conglomerate reported a $274.4 million loss.
The company embarked on a ``a comprehensive review of its assets,'' which led to the Cominco sale.
The conglomerate still makes money running a railroad but has taken losses flying planes, chopping trees, making steel, and mining ore. Oil and gas holdings have reduced profits as well. Analysts say CP has relied too heavily on cyclical natural resource industries.
The company is selling or planning to sell other assets. AMCA International, its steel and engineering arm, is shedding several divisions in both Canada and the United States. CP Hotels sold its five flight kitchens to Marriott Corporation earlier this year.
Stock market analysts say Canadian Pacific is doing the right thing by jettisoning unprofitable subsidiaries. By the end of the year it may no longer be the No. 1 company in Canada, but it may be a little more sound.