Noranda Income Fund Unit T.NIF.UN

SPA

[Armcorp]

Here's another aspect of the new SPA that occurred to me.  The facts as we are told them by Noranda are that the new SPA will be at market terms, whatever that means exactly.  Since there is negotiation going on, the terms are subject to interpretation.  The question I ask myself is, if Noranda was a stand-alone company without ownership or influence by Glencore, would it be in a position to negotiate a concentrate purchase agreement with Glencore at better-than-market terms?  The answer of course is yes, because that is what we have had for the last fifteen years (since the warnings coming out of Noranda are that the new SPA will be worse financially for Noranda, that means that what we have had is better than market) .  That means therefore that no matter what SPA we end up with, it is a fact that Glencore will have used its minority ownership position and control of the operations of the smelter to have created an SPA that is not as good as one that could have been arranged for a company independent of Glencore.

Some of you might argue that Noranda on its own would not be able to be as successful as it has been with Glencore.  This is the heart of the issue, and I am not qualified to answer that question.  However one can point to the independent directors, for example, and say that a single smelter operation does not need to pay $200,000 each to 4 people to be directors. It is a joke. What deal could be negoatiated with Glencore? Hard to say, but I am better than what the new SPA will look like.  With the higher price of zinc we are seeing lately, I would think the smelter would be in demand and could strike a good deal.  I think the smelter on its own without Glencore ownership would be picked up by someone else for much more than the current market cap of 118 million, even adding in the 30-odd  million liability that Glencore has put aside for itself as a dividend in  waiting. 

So the bottom line is that we the majority shareholders are being manipulated and abused (divvie cut in the past and another mooted) by a minority shareholder who is also in a conflict of interest by benefitting financially by both the SPA and the operations of the smelter.  If Glencore cared about us, why don't they negotiate an SPA at way better than market terms, so we get our divvie (and so do they), and then they can buy us out if they want to.  I really hope that somebody launches a class-action lawsuit against Glencore.  I am certain that if this company was in the USA doing this there would be lawfirms lining up to see them in court.  It is not enough for Glencore to point to the independent committee and say that they are protecting our interests.