Credit Suisse helps Cinram examine options

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TORONTO -- Canadian compact disc and DVD manufacturer Cinram International Income Fund on Tuesday said it has hired Credit Suisse Securities LLC to help "review" unspecified strategic and financial alternatives.

The move comes as U.S. hedge fund Amaranth Advisors LLC on Monday said it was looking to sell a 15% stake in Toronto-based Cinram, valued at around $175.5 million, into the market.

Cinram said Credit Suisse would help the Canadian company review "its business plan, growth strategy and market valuation."

"We look forward to moving ahead with this process in an expeditious yet methodical fashion," Henri A. Aboutboul, chairman of the Cinram International Income Fund trustees, said in a statement.

In an early November analyst call, Cinram CFO Lewis Ritchiewas was not specific about his company's reasons for hiring a financial advisor, but Cinram's plans could include taking the company private or an outright sale.

Such a move follows the Canadian government in late October proposing federal taxation changes for income trusts that have cast a pall over their market valuations (HR 11/1).

The impact of the taxation changes for income funds are minimized for Cinram by the fact that the Canadian company derives most of its revenues outside the country and is therefore paying taxes in those jurisdictions.

Even so, Ritchie told analysts in early November that the market valuations for income funds, such as his own, are expected to remain under a cloud as the new rule for the investment vehicles are sorted out.

"We do believe these proposed changes will have a significant effect on the market for income trusts in Canada, which could negatively impact on income trust valuations," Ritchie said.

Cinram makes raw, recordable compact disc, DVDs and other multimedia product for the entertainment industry.
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