Dominion Diamond Mines Obtains Initial Order of Protection Under Companies' Creditors Arrangement Act (CCAA)
April 22 2020 - 6:03PM
Business Wire
Dominion Diamond Mines ULC announced today that it and certain
of its affiliates (collectively, “Dominion” or the “Company”) have
filed for insolvency protection under the Companies’ Creditors
Arrangement Act ("CCAA") and obtained an order from the Alberta
Court of Queen’s Bench (the "Court") granting Dominion protection
under the CCAA. Dominion intends to use the CCAA process to engage
in discussions with its lenders, creditors, equity owner and other
stakeholders and to solicit and evaluate strategic alternatives to
restructure the Company financially and operationally, and position
it for long-term success when global economic and industry
conditions improve.
Dominion has received and is considering a proposal from an
affiliate of The Washington Companies, Dominion’s current equity
owner, to provide debtor-in-possession (“DIP”) financing, which
would help provide sufficient liquidity through the CCAA process.
This proposal is conditional upon Dominion agreeing to: (i) a
Memorandum of Understanding (MOU) regarding a possible sale of its
assets to an affiliate of The Washington Companies, as a stalking
horse bidder; and (ii) bidding procedures for the solicitation of
competing offers to such asset sale, either to purchase the
Company’s assets or to make an investment in the Company. If the
Washington proposal is agreed to by Dominion, the DIP financing,
MOU for an asset sale and bidding procedures will be subject to
approval from the Court with notice to interested parties.
The Washington Companies proposes in the MOU for an asset sale
that its affiliate will pay or otherwise satisfy, among other
things, all obligations to employees and governmental authorities
(including reclamation obligations) and all obligations under the
Company’s agreements with the First Nations and aboriginal groups.
The proposed asset sale would be a stand-alone bid that would
operate as a “floor bid” as part of a competitive process to
maximize value for Dominion’s stakeholders. Dominion is reviewing
the proposal with its advisors and is engaged in discussions on the
terms. The proposal is subject to various contingencies, including
due diligence.
Whether or not Dominion agrees to the Washington proposal, it
expects as part of the restructuring to obtain new financing, which
combined with the Company’s available cash, should provide
sufficient liquidity to continue to operate during the CCAA process
for the benefit of local communities and other stakeholders.
The CCAA filing was necessitated primarily by the impact of the
COVID-19 pandemic. Although the Company has strong diamond
inventory, sorting houses and diamond markets are closed. These are
key channels to facilitate the sale of the Company’s inventory, so
currently there is no ability to generate sufficient revenue to
support Dominion’s ongoing financial obligations.
Given the rapidly evolving environment and uncertainty of the
scope and duration of the restrictions and health and safety
concerns associated with the COVID-19 pandemic, along with market
dislocation and the continued capital calls from the Diavik joint
venture, the Company believes filing for protection under the CCAA
is the most prudent course of action. Dominion has worked
consistently to cut costs and optimize the Company’s long-term
capital structure. Despite these efforts, and after careful
consideration of all other available alternatives, Dominion’s board
of directors determined that it is in the best interests of the
Company and all its stakeholders to seek protection under the
CCAA.
Dominion’s commitments to employees and local communities remain
a priority for the Company. As the spread of COVID-19 subsides and
diamond markets reopen, Dominion plans to resume mining operations
at the Ekati Diamond Mine and safely recall its furloughed workers.
Dominion continues to believe in the long-term viability of its
assets and expects to emerge stronger and better able to deliver
value to all stakeholders.
During the CCAA process, it is expected that Dominion’s
management will continue to be responsible for handling the care
and maintenance of the Ekati Diamond Mine and all other necessary
day-to-day operations. The Company expects to arrange for
sufficient liquidity to meet its post-CCAA filing obligations to
current employees and suppliers of goods and services.
Under the terms of the Initial Order, FTI will serve as the
Court-appointed Monitor of Dominion to oversee the CCAA proceedings
and report to the Court. A copy of the Initial Order and other
Court materials and information related to the Company's CCAA
proceedings, all as may be updated or amended from time to time,
are available on the website maintained by FTI at
cfcanada.fticonsulting.com/Dominion.
Blake, Cassels & Graydon LLP is serving as Dominion’s legal
counsel and McDermott Will & Emery is serving as U.S. counsel.
Evercore is serving as financial advisor.
The Company intends to provide further updates on the CCAA
proceedings when there are significant developments.
About Dominion Diamond Mines Dominion Diamond Mines ULC
is a Canadian mining company and one of the world’s largest
producers and suppliers of premium rough diamond assortments to the
global market. The company owns a controlling interest in the Ekati
Diamond Mine, which it operates, and owns 40% of the Diavik Diamond
Mine. The company also holds a controlling interest in the Lac De
Gras Diamond Project. The Ekati and Diavik Diamond Mines, and the
Lac de Gras Diamond Project are located in the Northwest
Territories of Canada. In addition to its mining and exploration
operations, Dominion has offices in Canada, Belgium and India.
For more information, please visit www.ddmines.com and
Dominion’s private investor portal, or contact
investor@ddcorp.ca.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200422006055/en/
Rebecca Hurl Rebecca.Hurl@ddcorp.ca 403-797-0486
Sard Verbinnen & Co Liz Zale/Nikki Ritchie 212-687-8080
DominionDiamond-SVC@sardverb.com
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