September 01, 2010 22:32 ET

Noranda Income Fund Announces Termination of Exclusivity Agreement With Xstrata Zinc

VALLEYFIELD, QUEBEC--(Marketwire - Sept. 1, 2010) - Noranda Income Fund (the "Fund") (TSX:NIF.UN) announced today that Xstrata Zinc, through Xstrata Canada Corporation ("Xstrata"), has provided notice that it is terminating the exclusivity agreement entered into between Xstrata and the Fund as announced on July 30, 2010, as the parties are unable to reach an agreement on the offer price for a potential transaction. The Independent Committee noted that Xstrata's revised offer presented on August 30, 2010 of $3.90 per Priority Unit of the Fund would likely not be within the fair value range which the Independent Committee believed would likely be established by the independent valuator, Canaccord Genuity Corp., in its formal valuation report as required under applicable securities legislation.

Lisa de Wilde, Chairperson of the Independent Committee, has stated that, "after a difficult process, we are disappointed that we were not able to reach an agreement with Xstrata on the offer price for a potential transaction. Although we would have preferred for unitholders to have the opportunity to make individual decisions on the revised offer, the Independent Committee was challenged to provide its support at the revised offer price put forward by Xstrata. The Independent Committee believes that there are opportunities for the Fund to deliver value to its unitholders on a standalone basis and we look forward to focusing all of our efforts towards advancing these opportunities now that the Fund is no longer bound by the exclusivity agreement with Xstrata."

Since the beginning of the year and throughout the exclusivity period, with the assistance of its financial and legal advisors, the Independent Committee has worked to advance a variety of refinancing and capitalization alternatives with respect to both the Fund's outstanding revolving credit facility and senior secured notes, as well as other strategic alternatives available to the Fund, including the potential conversion of the Fund into a corporate entity. This process has included discussions with a variety of third party providers of financing. The termination of the exclusivity agreement will allow the Fund to enter into refinancing arrangements, which was otherwise prohibited during the exclusivity period. The Fund expects to have completed the refinancing in advance of the maturity of the Fund's outstanding debt.

Gryphon Partners is acting as the independent committee's financial advisor and Heenan Blaikie LLP is acting as the independent committee's legal advisor.


The Fund has provided forward-looking information regarding opportunities facing the Fund, the potential conversion of the Fund into a corporate entity, the long-term capital structure of the Fund and the Fund's recapitalization efforts. Forward-looking information involves known and unknown risks, uncertainties and other factors, which may cause the actual results or performance to be materially different from any future results or performance expressed or implied by the forward-looking information.

The forward-looking statements contained in this news release reflect the Fund's current expectations regarding future events and speak only as of the date of this news release. Forward-looking statements involve a number of risks and uncertainties, including those related to: (1) treatment under governmental regulatory, tax and environmental regimes: (2) the inability to obtain requisite consents or approvals related to the potential conversion from Xstrata or third parties; (3) loan default and refinancing risk; (4) potential negative financial impact from regulatory investigations, claims, lawsuits and other proceedings; (5) general business and economic conditions; and (6) the other general risks set out in the Fund's continuous disclosure documents, including its annual information form and management's discussion and analysis related to its 2009 annual financial statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. Although the forward-looking statements contained in this news release are based upon what the Fund believes to be reasonable assumptions, the Fund cannot assure investors that actual results will be consistent with these forward-looking statements.

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, Quebec. 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.

Contact Information

  • Noranda Income Fund's Manager
    Michael Boone
    Vice President and Chief Financial Officer