Dominion says court ‘has approved transaction’ for sale
Dominion Diamond Mines on Thursday told staff a transaction selling its assets to parent group The Washington Companies had been given court approval.
Dominion is in creditor protection – effectively pausing most of its debts – as the company says it cannot sell diamonds during the Covid-19 pandemic and has no money to pay bills.
The NWT’s Ekati diamond mine is owned by Dominion, while it holds a 40-percent stake in the neighbouring Diavik mine.
A Thursday message to staff, seen by Cabin Radio, read: “We are reaching out to inform you that we successfully received court approval of the proposed Washington transaction.
“With this, we are now moving forward with the sales process.”
Court approval for the process does not mean the sale is a done deal.
Some of the groups owed money by Dominion have complained at the concept of a parent company bidding for its own subsidiary’s assets, amid fears the deal will see some investors and creditors lose out.
However, last Friday, a lawyer representing The Washington Companies said the group would walk away if the court did not grant approval during or immediately after that day’s hearing.
The way the deal is structured means there are various ways to work out the exact price Washington is offering to pay.
In court documents filed last week, the monitor – a court-appointed group that oversees Dominion’s creditor protection process – valued the bid at around $500 million, including operating liabilities, security for reclamation of the mine once it closes, and covering the cost of pensions.
That price could rise to almost $750 million if Washington also takes Dominion’s stake in the Diavik mine, although it is believed negotiations with Diavik majority stakeholder Rio Tinto (through subsidiary DDMI) continue.
There are understood to be no other comparable bids for Dominion’s assets.
The consequences for the Diavik mine and its employees if Washington does not purchase Dominion’s 40-percent stake are unclear.
Companies accuse each other
Dominion and DDMI are currently fighting a separate court battle in which Dominion alleges DDMI has mismanaged operations at Diavik.
DDMI says it has operated Diavik successfully, acted appropriately, and will “vigorously defend these baseless claims.”
Each company has accused the other of acting irresponsibly during Covid-19. DDMI says Dominion should have kept Ekati open – it closed in March on safety grounds as the pandemic grew – while Dominion says Diavik should have similarly shut down.
Ekati’s closure saw more than 400 employees furloughed. Staff have a conference call scheduled for Friday morning to learn more about the proposed sale’s ramifications for their jobs.
Brendan Bell, former Dominion chief executive and now an independent member of the company’s board, last month said in court documents the sale to Washington would mean “the continued employment of nearly all of Dominion’s employees and the maintenance of a business partner to the significant number of companies, First Nations, and local communities who conduct business with Dominion.”