Monday, January 30, 2023

Glencore Canada buys Noranda Income Fund

Clarified that the purchase price represents a 45% premium to the closing price on the TSX on January 6, 2023.

Commodity trader and miner Glencore Canada has agreed to buy Noranda Income Fund for C$53.2 million in an equity transaction.

Glencore will reportedly acquire the fund’s issued and outstanding preference units for CDN$1.42 per unit.

This, through a settlement plan approved by the court.

point of agreement

Furthermore, the purchase price represents a 45% premium to the closing price on the TSX on January 6, 2023, the last trading day prior to the announcement.

and a 62% premium to the 20-day volume-weighted average price per preference unit on the TSX for the period ending January 6.

It should be noted that Glencore currently owns 100% of the units of the Noranda Income Fund Special Fund, which represents 25% of all issued and outstanding units of the fund.

other information

The Noranda Income Fund was established in 2002 as an income trust that distributes cash flows to shareholders from a zinc processing plant in Salaberry-de-Valleyfield, Quebec.

Anthony Lloyd, chairman of the board of the Noranda Income Fund and an independent committee member, said the fund provided significant cash flow to unitholders through 2017.

But, he said, today the fund faces a number of challenges operating as a single-asset zinc processing facility in an environment of rising costs and fluctuating raw material prices.

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“All of this faces significant near-term capital expenditure requirements, which impede the fund’s ability to resume cash flow distributions for the foreseeable future,” he explained.

He also said that the transaction provided an opportunity to investors to earn immediate and attractive premium for their units.

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