DBRS Places Noranda Operating Trust BBB Rating Under Review Negative

DBRS has today placed the BBB rating of the Senior Secured Notes of Noranda Operating Trust (Noranda Trust or the Trust) Under Review with Negative Implications following the announcement by Noranda Income Fund (Noranda Fund) that its three independent trustees have resigned without prior written notice. The three independent trustees of the Noranda Fund served as the Independent Committee of Noranda Trust, exploring financing alternatives to the Trust’s short-term credit facilities, which expire November 3, 2010, and its $154 million Senior Secured Notes, which mature December 20, 2010. The resignation of the independent trustees increases the uncertainty over the progress of Noranda Trust’s refinancing efforts.

DBRS retains its belief in the robust business viability of the Noranda Fund’s CEZinc facility under its long-term zinc concentrate processing contract to 2017 with Xstrata Canada Corporation (Xstrata Canada). But the resignation of the independent trustees, the requisition of a special meeting by dissident unitholders of the Noranda Fund (see DBRS press release dated August 31, 2010) and the termination of the exclusivity agreement entered into between Xstrata Canada and the Noranda Fund to explore a possible acquisition of the Noranda Fund by Xstrata Canada (see DBRS comment September 2, 2010), have sufficiently raised DBRS’s concerns over Noranda Trust’s refinancing process to put the rating of its Senior Secured Notes Under Review with Negative Implications.

Notes:
All figures are in Canadian dollars unless otherwise noted.

The applicable methodology is Rating Mining, which can be found on our website under Methodologies.