DBRS Comments on Noranda Cancellation of Special Meeting

DBRS notes today that Noranda Income Fund (the Fund) has announced that unitholders have withdrawn their requisition for a special meeting of unitholders of the Fund and that a special meeting of unitholders that had been scheduled for November 15, 2010, will be cancelled. DBRS views this as a positive development as Noranda Operating Trust (the Trust) continues its efforts to refinance its short-term credit facilities, which mature on December 3, 2010, and the Trust’s $153.5 million principal amount of Senior Secured Notes, which mature December 20, 2010.

Previously, the potential of a further change in independent trustees of the Fund so far along in the refinancing process had raised DBRS’s concerns regarding the ability of the Trust to provide refinancing solutions in a timely fashion (see the related DBRS press release date October 27, 2010, and August 31, 2010). The elimination of the challenge to the independent trustees allows the Trust to continue to focus its efforts on refinancing.

DBRS views that the robust business model of the Fund, based on a long-term concentrate supply agreement to 2017 with Xstrata Canada Corporation, supports our view that the Fund’s refinancing efforts will ultimately be successful.

Nonetheless, refinancing has not been achieved and the prospect of distributions from the Fund resuming remains unclear; hence, DBRS continues to maintain the Trust’s BBB-rated Senior Secured Notes and the Fund’s STA-5 (low) stability rating Under Review with Negative Implications, where they were placed on September 13, 2010, and April 20, 2010, respectively.

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