Cinram International Income Fund stood firm in the face of selling pressure despite a demand from a troubled investor - hedge fund Amaranth Advisors LLC of Greenwich, Conn.
In September, Amaranth lost about $6 billion in trading natural gas futures and publicly demanded that Cinram retain an adviser to find a buyer for the Cinram business.
Toronto-based Cinram ``has no intention of selling, or exploring the possibility of selling,'' Cinram Chairman Henri Abouthoul wrote an Amaranth executive.
Within days, the Cinram fund hired Credit Suisse Group for advice on acquisitions and said three possibilities under consideration have annual sales ranging from US$60 million to US$1 billion.
The Cinram business converted May 5 to an income trust with optical media producer Cinram International Inc. as an indirect wholly owned subsidiary. David Rubenstein succeeded founder Isidore Philosophe as chief executive officer July 1.
The subsidiary manufactures and distributes pre-recorded digital versatile discs, VHS videocassettes, audio compact discs, audiocassettes and CD-ROMs for movie studios, music labels, publishers and computer software firms.
As an income trust with a high yield, the Cinram fund avoids taxes by distributing most cash flow to unit investors monthly. Both the fund and, for Class B units, Cinram International LP, declared cash distribution of 27.08 Canadian cents per unit Oct. 16 to holders of record at the close of business Sept. 29.
For the second quarter, the Cinram fund reported a loss of US$18.6 million on sales of US$398.9 million.