Noranda Income Fund Unit T.NIF.UN

RE:RE:RE:RE:Where are we in zinc cycle & can we weather the lows?

[HomerAndCompany]

At the end of Q3 their debt was $85.4M, almost all of that being ABL. An additional $87.7M was available under the ABL facility. Probably more is available now. 

At $4/share NIF shares GC doesn't own would cost $150M. Levering the ABL up to the max NIF could probably pay $90 to 100M of it's own buyout leaving GC to come up with $50-60 million cash for a company that in a half decent year will have an EBITDA higher than that - and is heading into the sweet spot of it's commodity cycle. It sound like a good investment to me.  

Method wrote: Using ABL financing just makes sense when you have readily saleable inventory like zinc. Some people throw the ABL financing into their EV calculations without giving credit to the inventory on hand which makes the company look more expensive than it is on an EV/EBITDA basis. 

Glencore could probably buy the shares it doesn't own in NIF for cash and then lever up the smelter enough (and pay a dividend to themselves) for their to be almost no cash outlay at the corporate level.