Noranda Income Fund Unit T.NIF.UN

RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:Getting even more realistic about NIF

[Bigbird999]

About a year ago I went to SEDAR and dug out the SPA and all of the other ontracts between NIF and Noranda/Xstrata/Glencore.  It is a very complex set of interrelated agreements and my engineer's brain got lost in the cross references.  I posted the link and asked if somebody with a legal/contract background could review the documents and give their opinion on what they mean.  Nobody stepped up. 

What is clear in the SPA is that by Nov 4, Glencore must inform in writing if they DO NOT want to renew AND if they do not issue a notice of termination, that the agreement automatically renews for 5 years.  What is not clear (at least to me) is everything else that happens or could happen in the event Glencore terminates.  Add to this the fact that NIF is an income trust and as such, operates under different rules than a corporation.  It is not simple to change to a corporate structure so I do not believe that Glencore can make it happen unless they own 100%.

There are so many unanswered questions and a multitude of interpretations that it might require the courts to interpret what happens.  If Glencore terminates , they must do so by Nov 4.  Does that mean that NIF has to tell us on that day, or could they wait until the Q3 report on Nov 11?  What about the agreement  to supply feed past the May 17 expiry date?  How does that affect things?  Does this agreement somehow extend the "drop dead date" past Nov 4?  I would hope not, but......... There are so many moving parts......

I guess Glencore coulld terminate and tell NIF that they have until the end of 2017 to find feed from the world concentrate market and try to pick it up with sa lowball offer, but as you say this kind of feels "illegal".  At this point it doesn't really matter because we can only react to whatever happens, or doesn't happen, by Friday ( or maybe next Friday).

The majority of us who are still around are here because of the dividend and /or the possibility of a buyout.  The current market cap is about half of the value of the inventory ($88 million vs $173 million).  The book value is about 3 times the market cap ($88 million vs 275 million) and that does not include the land.which could be worth $250 million.  And in the event that they decide to shut it down TD estimates at least $3 per share in breakup value.

Glencore conttrols/markets about 30% of the zinc consumed in North America (265,000 tonnes from NIF and 120,000 tonnes from Nyrstar's Tennessee plant).  They are not going to walk away from this market.

The dice are in the air.  Here's hoping we dont C.rap out.....

BB