US$1.1 Billion Proposal Would Provide
Substantial Premium to Dominion Diamond Shareholders
The Washington Companies (“Washington”), a group of privately
held North American mining, industrial and transportation
businesses founded by industrialist and entrepreneur Dennis R.
Washington, today announced that it has made a proposal to the
board of directors of Dominion Diamond Corporation (TSX: DDC, NYSE:
DDC) (“Dominion”) for a transaction in which Washington would
acquire all of the outstanding common shares of Dominion for
US$13.50 per share in cash, representing a 36 percent premium to
Dominion’s closing stock price on March 17, 2017 and a 54 percent
premium to the price when discussions ended on March 15, 2017.
The proposal, which was made in a letter to Dominion’s board of
directors on February 21, 2017, is not conditional on financing but
is conditional on Washington conducting confirmatory due diligence
during a period of exclusivity and negotiating an acquisition
agreement. After multiple discussions and concessions made by
Washington over a three-week period, Dominion’s board of directors
continues to refuse to grant Washington access to due
diligence, which Washington has stated could lead to an
increased offer price, on terms acceptable to Washington.
Washington has a long track record of growing its businesses
throughout North America, with expertise in the mining industry and
the Canadian market. Washington strongly supports Dominion’s plans
to develop the Company's mining assets, while positively impacting
current and future employees and benefiting local communities.
Washington would provide Dominion opportunities for further growth
and work closely with management to put in place an appropriate
long-term cost structure to preserve the operational and financial
flexibility for management to execute its strategic plan. The
nature of the mining business favors an owner such as Washington,
which has a deep understanding of the sector, a long-term view and
permanent capital to invest in the business over multiple
decades.
“We believe our proposal is extremely compelling and clearly in
the best interests of Dominion and all of its stakeholders,
including shareholders, customers, employees, and communities,”
said Lawrence R. Simkins, President of Washington. “If the
transaction is consummated, it would provide Dominion shareholders
with a substantial cash premium and offer superior value to that
which Dominion could realize through ongoing execution of its plan
or any other available alternative transaction. As a part of
Washington, Dominion would receive significant, long-term
investment to develop its most promising growth assets, creating
meaningful opportunities for its employees and the communities in
which it operates.”
Mr. Simkins continued, “We are disappointed that Dominion’s
board has thus far prevented Washington from moving ahead with its
proposal under which shareholders would receive a substantial
premium and immediate liquidity, but we remain fully committed to
completing this transaction.”
Background On Discussions
Following Washington’s proposal to Dominion’s board of directors
on February 21, 2017, the companies engaged in discussions and an
in-person meeting to discuss the terms upon which Washington would
be given access to due diligence and a potential path forward. On
March 15, 2017 the Dominion board of directors advised that it
would not grant Washington access to due diligence unless
Washington agreed to a broad 12-month standstill and would not
agree to an exclusivity period as requested by Washington for it to
complete its due diligence. Despite reasonable accommodations,
which included Washington agreeing to a partial standstill
providing that it would not acquire shares, make an unsolicited
offer or sponsor a proxy fight during the standstill period and
offering generous carve-outs to its exclusivity request, Dominion
still refused. Washington made it clear to Dominion that, while it
would agree to certain standstill restrictions, under no
circumstances would it agree to be restricted from publicly
disclosing its proposal if the parties could not come to a
definitive agreement. As a result, discussions have ended.
The proposal letter sent by Washington to Dominion Diamond’s
board of directors on February 21, 2017 follows:
February 21, 2017
STRICTLY CONFIDENTIAL
James Gowans, Chairman,and the Board of DirectorsDominion
Diamond Corporation4920-52nd Street Suite 1102Yellowknife, NT I X1A
3T1 I Canada
Dear Mr. Gowans and Directors:
The Washington Corporations ("Washington" or "we") are pleased
to submit this non-binding proposal to acquire 100% of the equity
of Dominion Diamond Corporation (the "Company" or "you") in an
all-cash transaction (the "Proposed Transaction") on substantially
the terms described in this letter.
Based on our knowledge of the Company from publicly available
sources, we are proposing to acquire 100% of the Company's
outstanding common shares in cash at USD$13.50/share, which
represents a 35% premium to the closing price of USD$9.98 on
Friday, February 17th. The Proposed Transaction allows all of the
Company's shareholders to realize immediate, significant cash
consideration for their shares. The making of a binding proposal
with respect to the Proposed Transaction will be subject to our
confirmatory diligence, as discussed below, and the negotiated
terms of a customary definitive acquisition agreement (the
"Acquisition Agreement"). We anticipate that the Proposed
Transaction would be structured as a statutory plan of arrangement
under the Canada Business Corporations Act. Subject to the
completion of due diligence we may value the Company higher than
the indicated price.
The Washington Companies are a group of individual privately
held companies headquartered throughout the United States and
Western Canada, conducting business internationally. Our purpose is
to reliably provide equipment, technology, service, and special
expertise that aid our customers to operate more efficiently and
more profitably. We have focused our businesses in the areas of
mining, marine transportation, rail transportation, heavy equipment
distribution, environmental remediation and aviation technology and
service. We have a long history of successfully completing
transactions of this nature in an expedient fashion. We have
consistently demonstrated our commitment to our businesses by
supporting our management teams' growth initiatives through high
levels of service and the timely and prudent investment of capital.
In particular, we are committed to mining in North America and have
deep experience as the owner and operator of Montana Resources,
which is an open pit copper and molybdenum mine in Butte, Montana —
one of the largest in North America.
We, along with our team of advisors, have followed the Company
closely and are familiar with its operations, assets and with the
diamond industry. We strongly support management's plans to develop
the Company's mining assets and to continue to pursue strategies
for further growth. In particular, we believe that development of
the Ekati Mine Jay pipe is important to all of the stakeholders of
the Company, including the local economy, and is an integral part
of the value of the business. We also believe that the nature of
the mining business favors a shareholder with a long-term view,
patience and effectively permanent capital to invest in the
business over multiple decades.
Given our long-term investment philosophy, we anticipate
starting with a conservative capital structure that will allow us
to continue development of the Ekati Mine Jay pipe and pursue the
Company's current mining plan, while providing opportunity for
further growth. We have the resources to fund the Proposed
Transaction from existing liquidity. However, we will likely access
the debt markets for a portion of the consideration in order to
provide the Company with the most appropriate and cost-effective
long-term capital structure. Based on our experience, we are
confident that we will be able to arrange the debt financing needed
to support this acquisition and do not expect the Acquisition
Agreement or related documentation to contain a financing
contingency. Any changes to this proposed leverage and structure
will be assessed in collaboration with management to ensure that we
preserve the operational and financial flexibility necessary for
the management to execute its business plan.
As noted above, the making of a binding proposal to complete the
Proposed Acquisition would be subject to: (a) negotiation of a
mutually satisfactory binding Acquisition Agreement and related
documentation with standard representations, warranties, conditions
and other provisions; and (b) completion of confirmatory due
diligence, including: site visits, meeting with management and
customary operational, financial, legal and tax due diligence. The
Acquisition Agreement would be subject to standard conditions of
closing, including but not limited to, satisfaction of any required
regulatory approvals (which are not expected to be of any
consequence).
We have been working with advisors and the publicly available
information to further our understanding of the diamond industry
and the Company in particular. We are prepared to move
expeditiously to complete our due diligence and to negotiate the
definitive Acquisition Agreement within a 45-day confirmatory due
diligence period, which would be extendable by 15 days if we are
still working in good faith to negotiate the definitive Acquisition
Agreement after 45 days, and to do so in a manner which would not
be disruptive to the Company.
Until such time as we and the Company enter into a definitive
Acquisition Agreement, any public disclosure by the Company of the
existence or contents of this letter would be premature. If this
letter is accepted and agreed to, the Company agrees that the
existence and contents of this letter shall be held in strict
confidence by the Company and, except as required by law or the
rules and regulations of any applicable stock exchange and after
prior notice to Washington to the extent permissible, no disclosure
of the contents of this letter shall be made to any person
whatsoever other than its directors, officers and employees and/or
advisors who "need to know" such information for the purpose of
proceeding with the Proposed Transaction.
Based upon the substantial premium we expect to be offering to
your shareholders, the benefits involved for all of your
stakeholders, and the substantial time and resources we are
spending on the Proposed Transaction, we request an exclusivity
period for Washington to complete its outstanding diligence and
enter into a definitive Acquisition Agreement with the Company. If
this letter is accepted, in consideration of the time that will be
expended and the expenses incurred by us in connection with
pursuing the Proposed Transaction, you agree that for a period
commencing on the date of your acceptance of this letter until 45
days from the date we are first given access to a formal and
substantially complete data room with due diligence materials
(which period shall be extended by 15 days if we are still working
in good faith to negotiate the definitive Acquisition Agreement
after 45 days): (a) you and your affiliates will not, and will not
permit your and their respective officers, directors or agents
(collectively, "Agents"), directly or indirectly, to take any
action to solicit, initiate, encourage or facilitate any inquiries
regarding, or the making of, any Acquisition Proposal (as
hereinafter defined), and: (b) you will promptly advise us if you
receive any inquiries or proposals from a third party or their
Agents regarding an Acquisition Proposal, including the material
terms of any such Acquisition Proposal. The term "Acquisition
Proposal" means any offer or proposal for, or any indication of
interest in, (i) the direct or indirect purchase of any of the
shares of the Company or any successor, (ii) any merger,
amalgamation, arrangement or other business combination involving
the Company or any successor, (iii) the acquisition of any equity
interest in, or any material portion of, the assets of the Company
or its subsidiaries or any successor or any assets used in the
business of the Company, or (iv) any offer or proposal for a
securitization, monetization or similar arrangements relating to
the Company, its business or its assets, other than the
transactions contemplated by this letter. You represent and warrant
to us that you and your Agents are not currently involved in any
discussions or negotiations with respect to any Acquisition
Proposal by any person or entity other than Washington.
Except for the two preceding paragraphs (which are intended to
be binding), this letter is non-binding and does not create or
impose any legal obligation on any party. In particular,
notwithstanding anything in this letter to the contrary, this
letter is a statement of our intentions, shall be governed by and
construed in accordance with the laws of the State of New York
without regard to principles of conflict of laws, is not a legally
binding agreement on Washington, and shall not give rise to any
legal consequences in any respect. Washington will not be legally
bound to purchase the Company until the parties enter into binding
definitive agreements.
Should you have any questions regarding this letter, please
contact Larry Simkins at (406) 523-1383.
We hope you will agree that the prompt implementation of the
Proposed Transaction is in the best interests of the Company and
all of its stakeholders. The Proposed Transaction provides all
shareholders immediate, substantial cash consideration for their
shares, while providing the Company a stable, long-term owner
focused on growing the Company. This will provide significant
employment and economic benefit over a mine life that may be
extended by decades, positively impacting the Company's current and
future employees and the communities of the First Nations, the
Northwest Territories and all of Canada. We ask that you respond to
us by February 28, 2017. We look forward to hearing from you, so
that we can begin to move forward together with this exciting
transaction.
Sincerely,
WASHINGTON CORPORATIONS
By: /s/ Lawrence R. Simkins, President
BDT & Company, LLC is providing financial advice to The
Washington Companies, Skadden, Arps, Slate, Meagher & Flom LLP
is providing legal counsel in the U.S. and Blake, Cassels &
Graydon LLP is providing legal counsel in Canada.
About The Washington Companies
The Washington Companies, founded by industrialist and
entrepreneur Dennis R. Washington, are privately held companies
active in the core industries of mining, rail and marine
transportation, aviation, environmental remediation and restoration
services, and heavy equipment sales and service. The companies are
headquartered throughout Montana, the Pacific Northwest and western
Canada and conduct business internationally.
Cautionary Statement Regarding Forward Looking Statements and
Regarding the Nature and Legal Effect of the Proposal
Some information in this news release may be forward-looking.
Implicit in that information are assumptions and expectations
which, although considered reasonable by us, may prove to be
incorrect. Actual future outcomes and results, including whether
our proposal is acted upon by Dominion, whether a transaction and
the definitive documentation relating thereto are agreed to by the
parties and whether the conditions relating to such transaction are
satisfied, are subject to a number of risks and uncertainties, and
could differ materially from what is currently proposed or planned
as described herein. You should not place undue importance on
forward-looking information. While we may elect to, we are under no
obligation and do not undertake to update this information at any
particular time.
The non-binding proposal is subject to, among other things, the
satisfactory completion of confirmatory due diligence, the
negotiation and execution of a definitive agreement on mutually
agreeable terms and the receipt of any necessary corporate and
other third party approvals, including the approval of Dominion’s
board of directors and shareholders. No binding obligation will
arise with respect to the proposed transaction unless and until a
definitive agreement with Dominion has been executed and
delivered.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170319005058/en/
Sard Verbinnen & CoGeorge Sard / Anna Cordasco / Jared Levy
/ Pat Scanlan212-687-8080
DDC Enterprise L (NYSE:DDC)
Historical Stock Chart
From Dec 2024 to Jan 2025
DDC Enterprise L (NYSE:DDC)
Historical Stock Chart
From Jan 2024 to Jan 2025
