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Cinram Rejects Amaranth's Request to Hire Adviser

Date: Tuesday, September 19, 2006
Author: Sean B. Pasternak, Bloomberg.com

(Bloomberg) -- Cinram International Income Fund rejected calls from Amaranth Advisors LLC, its largest investor, to put itself up for sale, saying the hedge fund's problems led to the drop in the Canadian DVD maker's unit price yesterday.

Cinram's board ``has no intention of selling, or exploring the possibility of selling, the fund or any of its operating subsidiaries,'' Chairman Henri Aboutboul said today in a statement. Greenwich, Connecticut-based Amaranth has said it's Cinram's largest equity investor, with about a 15 percent stake.

Amaranth, which has about $9.5 billion in assets, told investors yesterday that two funds fell about 50 percent this month because of a plunge in natural-gas prices. The firm later urged Cinram to hire an adviser for a possible sale, saying the Toronto-based company's unit price doesn't reflect its worth.

The 3.6 percent decline ``was attributable to problems within the Amaranth organization, and was in no way caused by the fund,'' Aboutboul said.

Amaranth has an energy trading desk of more than 20 people led by Brian Hunter, who works in Calgary. As of June 30, energy trades accounted for about half of its funds' capital and generated about 75 percent of their profit.

Cinram units fell 40 cents to C$21.60 at 2:36 p.m. in trading today on the Toronto Stock Exchange. Earlier they had risen as much as 3.4 percent. The units had dropped 20 percent this year before today.

To contact the reporter on this story: Sean B. Pasternak in Toronto at spasternak@bloomberg.net .