Noranda Income Fund Unit T.NIF.UN

RE:glencore ownership 25%

[Bigbird999]

Yup  Glencore owns 25% as ordinary units.  This 25% has passed from Noranda to Falconbride to Xstrata and finally Glencore due to take overs and mergers over the past decade.  They do not get any distribution unless it is more than $.08 cents monthly.  But any distributions that we get are accrued and payable to Glencore if/when they convert their ordinary units to priority units in May 2017.  If there is no cash to satisfy at that time, I believe that they get a promissary not for the amount of "accrued distributions"  so it becomes debt.  Under the terms of the agreement, I am not sure what they are allowed to do regarding acquisition of Priority units Or a "take over"  proir to 2017.  There are probably a bunch of hoops to jump through.

In addition, Glencore is the exclusive agernt for all concentrate purchases and metal sales and gets paid a management fee to run/oversee the operation so they are making money at every turn. 

Glencore owns a 400,000 tonne Zn smelter in Spain and a 150,000 tonne smelter in Germany and a 200,000 tonne Zn plant in Sardinia.  All buy their concentrates at world market prices and have more expensivde power.  Spain and Valleyfield are the most efficient because of economies of size and technology employed.  Glencore is no stranger to the custom smelting buisiness and don't forget that Glencore afirst and foremost, traders, not miners or smelter rats.  When Glencore acquired Xstrata they publically stated that they intended to run the business like a trading company rather than a resource company,

I don't think that Glencore really cares about the share price because no matter what they price, they will still own 25% of a very efficient smelter in about 2 1/2 years.  At that time the fund will owe them about $25 million in "accrued distributions".  Until then the fund will continue to generate plenty of cash to distribute and take care of all of the liabilities.

This stock play is based on something other than the economics and viability of the operation.  It is Just one bunch of stock market players screwing another bunch of players.  The folks that hold on or buy at these depressed prices should be fine.

BB