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Commodity trader and miner Glencore Canada has agreed to buy Noranda Income Fund for C$53.2-million in an all-stock transaction.

Noranda Income Fund was established in 2002 as an income trust to distribute cash flow from the zinc processing facility in Salaberry-de-Valleyfield, Quebec, to unitholders.

“While the fund distributed significant cash flow to unitholders through to 2017, today the fund faces various challenges operating as a single-asset zinc processing facility in an environment of rising costs and fluctuating commodity prices and facing material near-term capital expenditure requirements, which inhibits the fund’s ability to recommence cash flow distributions in the foreseeable future,” said Anthony Lloyd, chairperson of the Noranda Income Fund board and member of the independent committee.

He said the transaction provided unitholders an opportunity to realise an immediate and attractive premium for their units.

Glencore would acquire the issued and outstanding priority units of the fund for C$1.42 a unit, by way of a court-approved plan of arrangement. The purchase price represents a 45% premium on the closing price on the TSX on January 6, 2023, the last trading day prior to announcement, and a 62% premium on the 20-day volume weighted average price per priority unit on the TSX for the period ending January 6.

Glencore currently holds 100% of the Noranda Income Fund’s special fund units, representing 25% of all issued and outstanding units of the fund.