Dominion Diamond proposes transaction to exit CCAA status, reopen Ekati mine

Dominion Diamond proposes transaction to exit CCAA status, reopen Ekati mine

CALGARY — The owner of the Ekati diamond mine is proposing a transaction that would allow it to exit court protection from creditors, provide operating funds and eventually restart the suspended Northwest Territories mine.

Dominion Diamond Mines ULC announced Friday it has signed a letter of intent with an affiliate of The Washington Companies under which an entity to be managed by Washington would buy its assets for about $177 million while assuming its operating liabilities.

Under the deal, which requires court approval, Washington would also provide Dominion with up to $84 million in short-term debtor-in-possession financing.

Operations at Ekati have been suspended since March to prevent spread of the COVID-19 pandemic.

The virus’s negative impact on diamond transport and marketing was also cited by the company in its court filing for Companies’ Creditors Arrangement Act protection in April.

“The Washington Companies’ proposal is to acquire Dominion’s assets and operating liabilities out of the CCAA process, with a substantially restructured balance sheet and new arrangements with its creditors, vendors and other stakeholders,” said Dominion spokeswoman Rebecca Hurl in an email.

“This restructured company would be better-positioned for the future. The proceeds of the sale would go to Dominion’s existing creditors, cover certain charges approved by the court and provide ongoing liquidity for Dominion through the CCAA process.”

The Washington Companies, a Montana-based group of privately held companies, bought Dominion for US$1.2 billion in 2017.

The acquisition offer would serve as a base bid for the assets under a court-supervised bidding process to win the highest or best offer, including an auction if necessary, Dominion said.

The sale process would be expected to close in the coming 90 to 120 days, it added.

Dominion also owns 40 per cent of the Diavik mine operated by Rio Tinto, located near Ekati about 300 kilometres northeast of Yellowknife.

The proposed sale would be conditional on reaching an agreement with Rio Tinto on the Diavik joint venture, it said.

Failing that, the assets being sold could exclude the Diavik interest.

In an affidavit filed with the Alberta Court of Queen’s Bench in April, Dominion chief financial officer Krystal Kaye said the pandemic has had a “devastating impact” on the global diamond mining industry.

Travel and business lockdowns were felt most keenly in India, where most of the world’s rough diamonds are sorted, cut and polished; in Antwerp, Belgium, where they’re sold; and the United States, the top buyer of diamonds for retail sale, she said.

Dominion’s high debt levels made it impossible for the company to continue its business as usual, Kaye said in the filing.

Dominion had revenue from diamond sales of about US$528 million in 2019, the affidavit said, but the shutdowns in India and Belgium had trapped diamond inventory from Ekati and Diavik with book value of about US$180 million.

According to the affidavit, Dominion is one of the two largest non-governmental employers in the Northwest Territories, with about 40 per cent of its 634 Canadian employees being northern residents and 60 per cent of those people being Indigenous people. It also employed 425 contract workers in 2019.

This report by The Canadian Press was first published May 22, 2020.

Dan Healing, The Canadian Press

mining

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Health Minister Tyler Shandro and Dr. Deena Hinshaw, the chief medical officer of health, receive flu shot. Photo via Government of Alberta
COVID-19: One more death in central zone

Ponoka County on province’s watchlist

Many rural municipalities were concerned about a proposed reduction to their industrial revenues, but Alberta’s Municipal Affairs minister has come up with an alternative solution. (Photo contributed)
Province and rural municipalities agree on a plan to support Alberta’s energy industry

Creating new wells or pipelines would result in a three year ‘tax holiday’

Kjeryn Dakin, owner of Buks and Bukwildz, poses for a photo with her plaque for Business Philanthropy Award, Photo Submitted
Sylvan Lake Business Awards show the resiliency of local business community

The business awards was held in six local restaurants on Oct. 17

The influenza vaccine will be available at no cost starting Monday in Alberta. “The more that we can avoid influenza-related tests, emergency visits and hospitalizations, the stronger our system will be to support those with COVID-19 and all other health needs," says Dr. Deena Hinshaw, the province's chief medical officer of health. (AP Photo/Ted S. Warren)
Hinshaw urges Albertans to get flu shot as COVID cases jump by 332

Alberta’s central zone now has 132 active COVID-19 cases

File Photo
Sylvan Lake Town Council opts to not increase Fortis and ATCO franchise rates

Franchise fees are charged to utility companies for the right and access to distribute commodities

In this photo provided by Shannon Kiss, smoke from the CalWood Fire billows, Sunday, Oct. 18, 2020, as seen from Gunbarrel, Colo. (Shannon Kiss via AP)
‘First guys out:’ Western Canadian air tanker fleet busy despite drop in wildfires

CEO believes wildfires have become more dangerous in recent years as people live closer to where they start

A passer-by walks past a COVID-19 testing clinic in Montreal, Friday, Oct. 16, 2020. THE CANADIAN PRESS/Ryan Remiorz
Canada ‘yet to see’ deaths due to recent COVID surge as cases hit 200,000

Much of the increase in case numbers can be attributed to Ontario and Quebec

robbery
UPDATE: Suspect identified in early morning shooting

Rimbey RCMP had responded to a complaint of an armed robbery at the Bluffton City General Store

Executive Director of Agape Kate Halas (left) receives $1000 from Sgt. Eric Christensen (right) on behalf of Agape. Photo/ Shaela Dansereau.
Former Wetaskiwin Peace Officer wins provincial award; gives back to Wetaskiwin community

Eric Christensen has won the Alberta Association of Community Peace Officers Award of Excellence.

Agriculture Minister Devin Dreeshen (Alberta government photo)
Big boost for Alberta college agriculture research

The $2-million agreement to benefit Lethbridge College’s applied research team

Grant and Barbara Howse, in quarantine in Invermere. Mike Turner photo
Denied entry into U.S., Canadian couple still forced to quarantine for 2 weeks

The rules around crossing the U.S. border led to a bizarre situation for an Invermere couple

Employee Sophia Lovink shows off a bag of merchandise in Toronto on Thursday, June 11, 2020. (THE CANADIAN PRESS/Nathan Denette)
Canada gets C-average grade on 2nd year of cannabis legalization

Cannabis Council of Canada releases report card on federal government and legalization

Canadian and American flags fly near the Ambassador Bridge at the Canada-USA border crossing in Windsor, Ont. on Saturday, March 21, 2020. Restrictions on non-essential travel between Canada and the United States are being extended until at least Nov. 21. THE CANADIAN PRESS/Rob Gurdebeke
Non-essential travel restrictions at Canada-U.S. border extended to at least Nov. 21

The restrictions do not apply to those providing essential services in either country

(The Canadian Perss)
Banff wolves have lower survival rate due to hunting, trapping outside park boundary

Researchers looked at 72 radio-collared wolves in the national park from 1987 to August 2019

Most Read