Dominion Diamond Mines has been granted a safety order after submitting for insolvency safety, the corporate introduced Wednesday in a press launch.
Based on the discharge, the corporate and a few of its associates “have filed for insolvency safety underneath the Firms’ Collectors Association Act (CCAA)” and has acquired an order from the Alberta Courtroom of Queen’s Bench granting safety to the corporate underneath the act.
“Dominion intends to make use of the CCAA course of to interact in discussions with its lenders, collectors, fairness proprietor and different stakeholders and to solicit and consider strategic options to restructure the corporate financially and operationally, and place it for long-term success when international financial and business circumstances enhance,” the press launch states.
Dominion Diamond is the controlling proprietor of the Ekati Diamond mine, and is a 40 per cent companion with Rio Tinto PLC within the Diavik Diamond mine — each within the Northwest Territories, roughly 300 kilometres northeast of Yellowknife.
Operations on the Ekati mine have been suspended since March 19 in mild of the COVID-19 pandemic, whereas manufacturing at Diavik continues.
Dominion Diamond owes its collectors $550 million. That invoice is due in 2022. Credit agencies were already skeptical that it could really pay this off.
Seattle-based Washington Firms is the fairness proprietor of Dominion Diamonds and, in line with the press launch, has supplied to offer enough money to see the corporate by means of the CCAA course of. In alternate, Dominion Diamond would conform to a memorandum of understanding concerning the sale of its belongings to a Washington Firms affiliate.
The corporate shouldered the rapid reason for its monetary issues on the COVID-19 outbreak.
“The CCAA submitting was necessitated primarily by the affect of the COVID-19 pandemic,” states the press launch.
“Though the corporate has robust diamond stock, sorting homes and diamond markets are closed. These are key channels to facilitate the sale of the corporate’s stock, so at present there isn’t any skill to generate enough income to assist Dominion’s ongoing monetary obligations.”
The corporate states that it expects to return the Ekati mine to operation as soon as the pandemic eases and diamond markets reopen.
“Dominion continues to imagine within the long-term viability of its belongings and expects to emerge stronger and higher in a position to ship worth to all stakeholders.”
FTI Consulting Inc. is the court-appointed CCAA proceedings monitor.