Dominion Diamond Corp. Responds to Self-Serving Disclosure of Unsolicited & Conditional Expression of Interest from The Washi...
March 19 2017 - 7:00PM
Business Wire
Company Clarifies the Record for
Shareholders
Approach Constructed as a Highly Opportunistic
“Free Option” Intended to Restrict the Company and its Multiple
Paths to Value Creation
Dominion Diamond Corporation (TSX: DDC, NYSE: DDC) (the
“Company” or “Dominion”) today confirmed that it has received an
unsolicited, conditional and non-binding expression of interest
from the Washington Corporations (“WashCorps”) to acquire the
Company. WashCorps’ preliminary expression of interest is subject
to, among other things, extensive due diligence, negotiation of
satisfactory agreements and regulatory approvals, and is contingent
on entering into discussions with Dominion on aggressive and off
market terms and conditions.
WashCorps submitted a three-page, mostly boilerplate, letter to
the Dominion Board on February 21, 2017. Despite the generic nature
of the letter and the lack of credibility of WashCorps in the
diamond industry and with public company acquisitions, the Board
consulted with its advisors and then invited WashCorps to present
their expression of interest to the Board at an in-person meeting
of the full Board of Directors of Dominion (the “Board”), which was
held on March 9, 2017.
Based on the presentation received from WashCorps, and by their
own admission, the Board confirmed that WashCorps does not have
experience in the highly specialized diamond mining and marketing
industry. WashCorps also advised that they did not have any unique
plans for the business. Regardless, the Dominion Board carefully
considered the expression of interest, including with the benefit
of legal and financial advice. While the Board considered the
expression of interest to be opportunistic, and believes that it
does not recognize all of the value in the Company under its
current business plan, the Board told WashCorps that it was
prepared to engage in discussions with them on customary terms,
including a customary standstill, and allow WashCorps to conduct
extensive due diligence on Dominion’s unique assets and growth
potential in order to improve their expression of interest.
Given the Company’s recent update on fiscal 2018 guidance and
the complexity of Dominion’s assets, to indicate that diligence is
confirmatory based on public records is highly questionable. It
would also be entirely irresponsible of the Company to allow a
third party access to its confidential information without the
benefit of customary agreements that protect the interests of
shareholders and all of the Company’s other stakeholders.
While the Board has repeatedly offered to constructively engage
with WashCorps on customary terms, WashCorps continues to demand,
as a condition to any discussions, a lengthy period of exclusivity,
as well as the ability to veto the Board’s choice of new CEO.
WashCorps has also refused to accept a customary form of standstill
that would restrict it from using the confidential information to
acquire control of the Company. These conditions would frustrate
the Company’s ability to establish its senior leadership, would
prevent Dominion from pursuing other value-creating opportunities,
beyond the Company’s current business plan, and would leave
WashCorps free to lower its preliminary, highly conditional
expression of interest or take advantage of the Company’s
confidential information to further its own interests through a
subsequent “cashless takeover.” In other words, WashCorps is
seeking a self-interested “free option” to learn of Dominion’s
business and prospects, while paralyzing the Company.
The Dominion Board is more than willing to consider all
value-creating opportunities for the Company, but it will not do so
to the detriment of its shareholders and other stakeholders. The
Board of Directors reiterates its openness to engage with WashCorps
on customary terms.
TD Securities Inc. is acting as financial advisor to the
Company, Stikeman Elliott LLP is acting as legal advisor and
Kingsdale as strategic advisors.
About Dominion Diamond Corporation
Dominion Diamond Corporation is a Canadian diamond mining
company with ownership interests in two major producing diamond
mines. Both mines are located in the low political risk environment
of the Northwest Territories in Canada. The Company operates the
Ekati Diamond Mine, in which it owns a controlling interest, and
also owns 40% of the Diavik Diamond Mine. It supplies premium rough
diamond assortments to the global market through its sorting and
selling operations in Canada, Belgium and India.
For more information, please visit www.ddcorp.ca
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version on businesswire.com: http://www.businesswire.com/news/home/20170319005066/en/
Investors:Dominion Diamond CorporationJacqueline Allison,
416-205-4371Vice-President, Investor
Relationsjacqueline.allison@ddcorp.caorCanadian Media:DFH Public
AffairsJohn Vincic, 416-206-0118 x.224orUS Media:Gagnier
CommunicationsDan Gagnier, 646-569-5897
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