TORONTO, Jan. 13, 2023 (GLOBE NEWSWIRE) — Noranda Income Fund (TSX: NIF.UN) (the “Fund”) today issued the following statement setting the record straight regarding comments made on January 10, 2023 by unitholders Riverstyx Capital Management and LM Asset Fund Limited Partnership.

As part of the Fund’s active and ongoing communications with its unitholders, the Fund values constructive input from unitholders and takes all unitholder views seriously. The recent comments of the activist unitholders distract from the real choice in front of unitholders, which is to either realize immediate and optimal cash value for their units by way of the privatization of the Fund by Glencore Canada Corporation (“Glencore”) or attempt an uncertain alternative path which would lead to an erosion of value for unitholders coupled with ongoing uncertainty as to the future cash distributions to unitholders.

Every Option Explored

For almost two years now, the Independent Committee of the Board of Trustees of Noranda Operating Trust (the “Independent Committee”), comprised entirely of Trustees who are independent of both the Fund and Glencore, has been engaged in an extensive and meaningful process to identify and consider any and all alternatives that would allow for the Fund to remain a going concern and deliver value to unitholders, including a sale to parties other than Glencore.

The process began with a robust evaluation by an external consultant of the current state of the Fund’s performance, including an evaluation of alternative operating structures. Following this, an independent financial advisor was retained to review the Fund’s financial situation, capital structure and working capital, and then review potential alternatives available to the Fund to address the financial, liquidity and leverage challenges facing its business. Alternatives identified and considered by the Independent Committee during the process included:

  • the possibility of amendments to commercial agreements,
  • debt financing for the capital investment requirements necessary to ensure the processing facility is operational over the long term,  
  • the possibility of a sale to a third party,
  • attempting a financing by way of a rights offering, back-stopped by Glencore, which may be dilutive if unitholders did not fully participate,
  • a court supervised restructuring under the CCAA, and
  • the shutdown and closure of the processing facility including costly site rehabilitation followed by a sale of the Fund’s assets.

Following the extensive review process undertaken by the Independent Committee, none of the above options were deemed viable to ensure the long-term sustainability of the Fund and realize meaningful benefits for unitholders, for reasons including notably the Fund’s unique structure and the inherent contractual restrictions embedded in the material contracts of the Fund in place since its inception, the Fund’s highly leveraged capital structure, significant working capital requirements and fluctuations thereof and difficulties generating cash.   It is important for unitholders to remember that the Fund only has one asset, with no mines or trading desk to bolster cash flows which is unique in the zinc smelting industry.

Deferral of Processing Facility Investments Not an Option

As previously announced, the Fund is facing pressing capex needs. Capex investments estimated at US$100M in October 2022 are required in order to complete a refurbishment of the cellhouse, including cell and overhead crane replacements, which is necessary to stabilize and improve operating conditions at the processing facility. These investments are not optional and cannot be deferred.

Furthermore, it is noted that the US$100M capital expenditure only reflects necessary, mandatory capital expenditures to ensure continuity of operations at CEZ. In light of the very same challenges that have hampered the Fund in most recent years, including disappearance of predictable local feed, additional material capital expenditures would need to be made if there is any hope of modernizing the facility sufficiently to allow it to succeed going forward.  

The Choice in Front of Unitholders

The Independent Committee was confronted with a choice – to recommend the relative certainty of an all-cash privatization or be left with no other option than to attempt a US$100 million rights offering in order to raise the capital necessary to make the required capex investments, as debt financing is not an option due to the Fund’s capital structure, leverage and cash flow profile. A rights offering would have a potentially dilutive effect on the priority unitholders if such unitholders did not participate and would require US$75M aggregate investment on the part of priority unitholders to maintain pro rata equity holdings.

After a thorough evaluation of the challenges facing the Fund and all of the options available to the Fund in light thereof, the Independent Committee is of the view that the privatization of the Fund by Glencore is the best avenue in order for priority unitholders to realize the best value reasonably available for their units. The sale price has been evaluated, backed by an independent valuation, to be within the range of fair market value of the priority units and two independent fairness opinions indicate that the consideration to be received by the priority unitholders is fair, from a financial point of view, to such unitholders. The Independent Committee therefore recommended to the Board and the Board, with Glencore representative Trustees abstaining, is recommending to priority unitholders that they vote for the privatization of the Fund by Glencore. The special meeting of the Fund’s unitholders to consider and vote on the proposed privatization is expected to be held on or about February 28, 2023.

The Independent Committee remains convinced that the proposed privatization of the Fund by Glencore is in the best interests of the Fund and its unitholders and is an attractive offer for the Fund’s priority unitholders in the face of the challenges that remain on the horizon for the Fund.

The Independent Committee remains available to speak with unitholders, including the activists, in order to ensure they are receiving all of the information they need to make an informed choice at the meeting.

Attention Unitholders: If you have questions or want to ensure you receive the latest updates directly to your mobile device please call or text Kingsdale Advisors at 1-888-213-0093.   Kingsdale Advisors can also help you by email at

Forward-Looking Information
Certain information in this press release, including statements regarding the proposed privatization of the Fund by Glencore, profitability prospects of the Fund and prospects for raising capital, the cost of and financing of a full cell and crane replacement and the unitholder meeting, are forward-looking information. In some cases, but not necessarily in all cases, forward-looking information can be identified by the use of forward-looking terminology such as “plans”, “targets”, “expects” or “does not expect”, “is expected”, “an opportunity exists”, “is positioned”, “estimates”, “intends”, “assumes”, “anticipates” or “does not anticipate” or “believes”, or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might”, “will” or “will be taken”, “occur” or “be achieved”. Statements containing forward-looking information are not historical facts but instead represent management’s expectations, estimates and projections regarding future events.

Forward-looking information is necessarily based on a number of opinions, assumptions and estimates that, while considered reasonable as of the date of this press release, are subject to known and unknown risks, uncertainties, assumptions and other factors that may cause the actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking information, including but not limited to the factors described in greater detail in the “Risk Factors” section of the Fund’s Annual Information Form dated March 30, 2022 for the year ended December 31, 2021 and the Fund’s other periodic filings available at These factors are not intended to represent a complete list of the factors that could affect the Fund; however, these factors should be considered carefully. There can be no assurance that such estimates and assumptions will prove to be correct. The forward-looking statements contained in this press release are made as of the date of this press release, and the Fund expressly disclaims any obligation to update or alter statements containing any forward-looking information, or the factors or assumptions underlying them, whether as a result of new information, future events or otherwise, except as required by law.

About the Noranda Income Fund
Noranda Income Fund is an income trust whose priority units trade on the Toronto Stock Exchange under the symbol “NIF.UN”. Noranda Income Fund owns the electrolytic zinc processing facility and ancillary assets (the “Processing Facility”) located in Salaberry-de-Valleyfield, Quebec. The 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 zinc customers are located. It produces refined zinc metal and various by-products from sourced zinc concentrates. The Processing Facility is operated and managed by Canadian Electrolytic Zinc Limited, a wholly-owned subsidiary of Glencore Canada Corporation. Further information about Noranda Income Fund can be found at:

For more information: Andrew Sidnell
Vice President, Special Situations
Kingsdale Advisors

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By GlobeNewswire

GlobeNewswire is one of the world's largest newswire distribution networks, specializing in the delivery of corporate press releases, financial disclosures and multimedia content to media, investors, and consumers worldwide.

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