Noranda Income Fund Files Circular, Independent Committee urges Unitholders to Vote for the Arrangement and Secure their All-Cash Offer - Seite 3

Negotiation Process

The Arrangement is the result of extensive arm’s-length negotiations between the Independent Committee and Glencore, with the oversight and participation of the Independent Committee’s external financial and legal advisors, as well as the external legal advisor to the Fund’s manager.

Before recommending and agreeing on the price per Priority Unit, the Independent Committee received an independent valuation and two fairness opinions to ensure that the price agreed upon was fair for Priority Unitholders.

Independent Committee’s View

The choice before the Independent Committee was clear, to proceed with the relative certainty of an all-cash privatization and ensure that Priority Unitholders could realize value for their Priority Units or contemplate an uncertain alternative path for the Fund, with limited options, none of which are certain to succeed. Therefore, the Independent Committee determined that the Arrangement was in the best interests of the Fund and fair to Priority Unitholders and unanimously recommends that Priority Unitholders vote FOR the Arrangement. The Board of Trustees (with Glencore representative trustees abstaining) also unanimously recommends that Priority Unitholders vote FOR the special resolution approving the Arrangement.

In reaching this conclusion, the Independent Committee and the Board of Trustees took into consideration several factors, including:

• Compelling Value to Priority Unitholders: The C$1.42 per Priority Unit purchase price represents a 45% premium on the closing price on the TSX on January 6, 2023, the last trading day prior to the announcement of the arrangement agreement, and a 62% premium on the 20-day volume weighted average price per Priority Unit on the TSX for the period ending on January 6, 2023.
  
  
• Certainty of Value and Immediate Liquidity: The Arrangement allows Priority Unitholders to realize an attractive price for their Priority Units through an all-cash transaction, thereby providing certainty of value and immediate liquidity.
  
  
• Inability to Generate Distributable Cash: In 2017, following the initial 15-year favourable supply and processing agreement put in place at the Fund’s inception in 2002, the Fund’s ability to generate cash flow became subject to market volatility in treatment charges and zinc prices. The Fund has not been able to generate distributable cash to proceed with monthly distributions for Priority Unitholders since 2017. With immediate and long-term capital expenditures needed in the Processing Facility it is unlikely the Fund would be able to recommence such distributions in the foreseeable future.