Noranda Income Fund
TSX : NIF.UN

Noranda Income Fund

July 22, 2011 14:24 ET

Noranda Income Fund Announces Private Offering of $90 Million Senior Secured Notes Due December 2016 and Provides Update on Long-Term Refinancing

SALABERRY-DE-VALLEYFIELD, QUÉBEC--(Marketwire - July 22, 2011) -

THIS PRESS RELEASE IS NOT FOR DISSEMINATION IN THE UNITED STATES OR TO ANY UNITED STATES NEWS SERVICES. ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF U.S. SECURITIES LAWS.

Noranda Income Fund (the "Fund") (TSX:NIF.UN) today announced that its wholly-owned subsidiary, Noranda Operating Trust (the "Operating Trust") has entered into an agreement with CIBC World Markets Inc. and Scotia Capital Inc. (collectively, the "Underwriters"), to sell on a private placement basis, $90 million aggregate principal amount of 6.875% senior secured notes due 2016 (the "Notes"). The Notes will be fully and unconditionally guaranteed, on a senior secured basis (subject to the terms of an intercreditor agreement with the lenders under the new ABL Facility), by the Fund, Canadian Electrolytic Zinc Limited (the "Manager"), Noranda Income Limited Partnership (the "Limited Partnership") and NILP General Partner Ltd. (the "General Partner"). The Notes will amortize on a straight-line basis to a $15 million remaining principal balance at maturity on December 28, 2016. Under the trust indenture to be entered into in connection with the Notes, the Fund will be permitted to distribute excess cash flows to its unitholders subject to compliance with certain financial covenants and other customary restrictions.

The Operating Trust plans to use the net proceeds from the sale of the Notes, together with borrowings under the ABL Facility (as described below), to repay all amounts outstanding under its existing bridge facility and for general corporate purposes.

The issuance of the Notes, pursuant to the private placement, is subject to customary closing conditions. Closing of the offering is expected to occur on or about July 28, 2011.

The Notes are being offered in reliance on the accredited investor exemption in Canada. The Notes to be offered have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered, sold or delivered, directly or indirectly, in the United States of America, its territories, its possessions and other areas subject to its jurisdiction or to, or for the account or benefit of, a U.S. person.

ABL Facility

Concurrently with and as a condition of the closing of the offering of the Notes, the Operating Trust expects to enter into a 5-year secured asset-based revolving credit facility ("ABL Facility") in an amount up to $150 million. The ABL Facility is to be provided by CIBC Asset-Based Lending Inc. as co-lead arranger, administrative agent, collateral agent, syndication agent and a lender, and Roynat Asset Finance, a division of Roynat Inc., as co-lead arranger and a lender.

The proceeds of the ABL Facility will be used for working capital and other general corporate purposes, and, together with the net proceeds of the Offering, be used to repay all amounts outstanding in respect of the Operating Trust's bridge facility.

The ABL Facility will be fully and unconditionally guaranteed, on a senior secured basis (subject to the terms of an intercreditor agreement with the noteholders), by each of the Fund, the Manager, the Limited Partnership and the General Partner.

Under the credit agreement entered into in connection with the ABL Facility, the Fund will be permitted to distribute excess cash flows to its unitholders subject to a minimum excess availability and other customary restrictions.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the Notes in any jurisdiction in which such offer, solicitation or sale would be unlawful. The Notes have not been and will not be qualified for sale to the public under applicable Canadian securities laws and, accordingly, any offer and sale of securities in Canada will be made on a basis which is exempt from the prospectus requirements of such securities laws.

Noranda Income Fund is an income trust whose units trade on the Toronto Stock Exchange under the symbol "NIF.UN". Noranda Income Fund was created to acquire Noranda Inc.'s CEZ processing facility and ancillary assets (the "CEZ processing facility") located in Salaberry-de-Valleyfield, Québec. The CEZ processing facility is the second-largest zinc processing facility in North America and the largest zinc processing facility in eastern North America, where the majority of its customers are located. It produces refined zinc metal and various by-products from zinc concentrates purchased from mining operations. The CEZ processing facility is operated and managed by Canadian Electrolytic Zinc Limited.

Further information about Noranda Income Fund can be found at www.norandaincomefund.com.

READER ADVISORY

Statements in this press release contain forward-looking statements, including statements regarding the anticipated closing of the offering of the Notes, the establishment of the ABL Facility and the use of proceeds therefrom. Readers are cautioned that assumptions used in the preparation of such information may prove to be incorrect. Events or circumstances may cause actual results to differ materially from those predicted, as a result of numerous unknown risks, uncertainties, and other factors, many of which are beyond the control of the Fund and the Operating Trust. The accuracy of such information and statements is subject to a number of risks, uncertainties and assumptions that may cause actual results to differ materially from those projected, including, but not limited to, the effect of general business and economic conditions and the conditions of financial and credit markets, the Fund's ability to operate at normal production levels, the demand for zinc metal, sulphuric acid and copper in cake, changes to the supply and demand for specific zinc metal products and the impact on the Fund's realized premiums, legislation governing the operation of the Fund including, without limitation, air emissions, discharges into water, waste, hazardous materials, workers' health and safety, and many other aspects of the Fund's operations, as well as the impact of current legislation and regulations on expenses, capital expenditures, taxation and restrictions on the operation of the CEZ processing facility and other general risks and uncertainties set out in the Fund's continuous disclosure documents on available on SEDAR at www.sedar.com.

Forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual events, results or performance to be materially different from any future events, results or performance expressed or implied by the forward-looking information. As a result, the Fund cannot guarantee that any forward-looking statements will materialize. Assumptions, expectations and estimates made in the preparation of forward-looking statements and risks that could cause the Fund's actual events, results or performance to differ materially from the Fund's current expectations are discussed throughout this document and in our other continuous disclosure materials available on SEDAR at www.sedar.com. Forward-looking information contained in this press release is based on management's current estimates, expectations and assumptions, which management believes are reasonable as of the current date. You should not place undue importance on forward-looking information and should not rely upon this information as of any other date. Except as required by law, the Fund does not undertake to update these forward-looking statements, whether written or oral, that may be made from time to time by the Fund or on the Fund's behalf.

The Toronto Stock Exchange has not reviewed, nor does it accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • Canadian Electrolytic Zinc Limited
    Michael Boone
    Vice President and Chief Financial Officer
    Noranda Income Fund's Manager
    416-775-1561