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Noranda Income Fund Obtains A $250 Million Bridge Facility

Dec 2, 2010 - 17:31 ET

VALLEYFIELD, QUEBEC--(Marketwire - Dec. 2, 2010) - Noranda Income Fund (the "Fund") (TSX:NIF.UN) announced today that it has obtained a Bridge Facility for an amount of $250 million from a syndicate of lenders led by Canadian Imperial Bank of Commerce and The Bank of Nova Scotia. The Bridge Facility is comprised of a $130 million term loan tranche intended to partly repay all of the outstanding senior secured notes in the amount of $153.5 million maturing on December 20, 2010 and a $120 million revolving tranche intended to refinance the existing revolving credit facility of the Fund and Noranda Operating Trust ("Operating Trust") maturing on December 3, 2010, to finance general corporate purposes including working capital and to repay the remaining $23.5 million on the senior secured notes mentioned-above. The Bridge Facility will enable the Fund to continue to pursue a long-term debt financing.

The terms of the Bridge Facility are substantially the same as the terms of the existing revolving facility, subject to certain adjustments to include a quarterly reduction of the term loan tranche portion of the Bridge Facility. The maturity of the Bridge Facility is June 2, 2011, subject to an extension of 6 months, at the option of Operating Trust, and early maturity in certain circumstances. The credit agreement governing the Bridge Facility contains covenants that restrict the Fund (and its subsidiaries) in several respects including their ability to make distributions or redeem or repurchase units.

"We are pleased to have been able to obtain this bridge financing", said Mr. John Swidler, Chairman of the Board of Trustees of Operating Trust. "It stabilizes the financial position of the Fund and Operating Trust. We will now have the time to review all available long-term financing alternatives and implement the best alternative for the Fund and Operating Trust."

The Bridge Facility is secured by the assets of the Fund, Operating Trust, Noranda Income Limited Partnership and Canadian Electrolytic Zinc Limited ("the Manager"). The lenders have also requested, as a condition precedent to the refinancing, that Xstrata Canada Corporation ("Xstrata Canada") reaffirm the credit support it had provided in the past.

Xstrata Canada's main items of credit support are: (i) limited recourse and/or unconditional guarantees, pledges and general security agreements provided by affiliates of Xstrata Canada, including the Manager, which acts as the administrator of the Fund and manager of Operating Trust and the Processing Facility; (ii) consent agreements pursuant to which the Manager has restricted its ability to terminate the Administration Agreement, the Management Services Agreement and the Operating and Management Agreement relating to the Fund, Operating Trust and Noranda Income Limited Partnership; and (iii) consent agreements pursuant to which Xstrata Canada has also restricted its ability to terminate the Supply and Processing Agreement while the Fund's Bridge Facility is outstanding, even if such agreement is breached by Noranda Income Limited Partnership.

In consideration for the credit support, Operating Trust and Xstrata Canada have negotiated a fee of US$400,000 to be paid to Xstrata Canada by Operating Trust which the Independent Committee of Operating Trust, after due consideration and with the assistance of its financial and legal advisors, have determined to be reasonable in the circumstances. While such credit support may be required in connection with the long-term financing of the Fund and Operating Trust, there is no assurance, should it be so required, that Xstrata Canada will agree to provide its credit support in connection with such long-term financing.

The Independent Committee of Operating Trust has considered several factors before unanimously recommending to the Board of Trustees the approval of the Bridge Facility, including the payment of the fee to Xstrata Canada, including among others: (i) the various financing alternatives considered by the Independent Committee and its independent financial advisor, TD Securities Inc.; (ii) the tight timeframe available to the Fund and Operating Trust before the maturity dates of the revolving facility and the senior secured notes; (iii) the reasonableness of the terms, including the cost, of the bridge financing to the Fund and Operating Trust in the circumstances of the Fund and Operating Trust; (iv) the fact that the reaffirmation of the credit support by Xstrata Canada is a condition precedent to the bridge refinancing; (v) the negotiations with Xstrata Canada regarding the reaffirmation of its credit support and the fee paid to Xstrata Canada as a result of such negotiations; and (vi) the fact that the Fund and Operating Trust had no other alternative to Xstrata Canada's credit support. The Board of Trustees of Operating trust unanimously approved the Bridge Facility, with Trustees related to Xstrata Canada abstaining from voting on the appropriateness of the fee paid to Xstrata Canada.

The material documents relating to the Bridge Facility and Xstrata Canada's credit support will be filed on Sedar contemporaneously with the filing of a material change report by the Fund.


The Fund has provided forward-looking information regarding a longer term extension of the Revolving Facility and the refinancing of the Notes. 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.

Examples of such risks, uncertainties and other factors include, but are not limited to, the following: (1) loan default and refinancing risk; (2) general business and economic conditions; and (3) 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.

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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