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Noranda Income Fund Announces 2010 "In-Kind" Distribution

Dec 17, 2010 - 08:00 ET

SALABERRY-DE-VALLEYFIELD, QUÉBEC--(Marketwire - Dec. 17, 2010) - Noranda Income Fund (the "Fund") (TSX:NIF.UN) announced today that the Board of Trustees of Noranda Operating Trust has approved the payment of a special distribution of $0.48 per Priority Unit of the Fund, to be settled "in-kind" by the distribution of additional Priority Units (the "In-Kind Distribution"). The In-Kind Distribution will be made to holders ("Unitholders") of Priority Units of record on December 31, 2010, and shall also be settled on such date.

The In-Kind Distribution is intended to ensure that, as required under the terms of its trust indenture, the Fund will not be liable to pay income taxes in respect of its current taxation year ending December 31, 2010, by distributing to its Unitholders additional Priority Units having a value at least equal to the Fund's income for the year not already distributed to Unitholders. The amount of the In-Kind Distribution is intended to equal the entire amount of the Fund's income for 2010. No other distributions have been made to Unitholders in 2010. The Board of Trustees of the Trust considered making a portion of the In-Kind Distribution in cash and determined that it was not appropriate, as the long-term financing of the Fund has not yet been resolved.

The exact amount of Priority Units to be issued will depend on the weighted average trading price of Priority Units on the Toronto Stock Exchange for the ten trading days prior to December 31, 2010. Immediately following the In-Kind Distribution, the Priority Units will be automatically consolidated such that the number of outstanding Priority Units after the consolidation is the same number of Priority Units outstanding immediately prior to the In-Kind Distribution. 

As a result of the In-Kind Distribution, taxable Canadian residents who hold Priority Units will be required to include in income (for Canadian tax purposes) the amount of the value of Priority Units received to the extent that it constitutes net income for the Fund. 

Non-resident Unitholders will be subject to applicable Canadian withholding tax on the In-Kind Distribution. This withholding tax obligation may be satisfied by withholding from the distribution of Priority Units to non-resident Unitholders sufficient Priority Units to satisfy the withholding obligation. The effect of such withholding would be that non-resident holders of Priority Units will experience a net decline in the number of Priority Units they hold following the automatic consolidation discussed above, as compared to the amount held immediately prior to the distribution of Priority Units.

Comments on the tax implications of the In-Kind Distribution are provided as general information only. They are not intended to be legal or tax advice to any Unitholder. All Unitholders should consult legal, business and tax advisors about the tax implications of the In-Kind Distribution. Further information regarding the In-Kind Distribution, consolidation process and resulting income tax treatment for holders of Priority Units is located on the Fund's website at:

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


Michael Boone
Vice President and Chief Financial Officer,
Canadian Electrolytic Zinc Limited
Noranda Income Fund's Manager

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