Noranda (NRD-T) has sold its remaining 12 million priority units of Noranda Income Fund (NIF.UN.T) for $9.85 apiece to a group of underwriters led by CIBC World Markets and Scotia Capital.
The move leaves Noranda with a quarter-stake in the fund via its holding of ordinary shares. Unlike the priority shares, the ordinary shares do not share in the fund’s cash distribution. The ordinary shares can be converted into priority units on a one-for-one basis.
Noranda will use the proceeds of the sale to repay debt.
The Noranda Income Fund was created to acquire Noranda’s CEZinc processing facility and ancillary assets in Salaberry-de-Valleyfield, Quebec. The plant is the second-largest zinc processing facility in North America and produces refined zinc metal and various by-products from zinc concentrates purchased from mining operations.
Noranda acquired CEZinc (formerly known as Canadian Electrolytic Zinc) when it amalgamated with Kerr Addison Mines in 1996.
Employing around 745 workers, the plant has a capacity of 525,000 tonnes of concentrate or 265,000 tonnes of zinc metal.
The fund’s units closed unchanged at $9.65 on July17. The 52-week range is $9.37-$10.30.
Meanwhile, a Quebec Superior Court has approved a class action suit against Noranda, according to Dow Jones Business News. The suit represents about 950 non-unionized retirees.
Unterberg, Labelle, Lebeau, the law firm representing the plaintiffs, alleges that Noranda is improperly implementing its pension plan. Unterberg says the pension should be based on the 5 best-earning years of service, including vacation pay, bonuses, stock options and other fringe benefits; Noranda figures its pension calculation on the employee’s average earnings over the last 5 years of employment.
Noranda’s second-quarter financial results are due out before the market opens on July 25.
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