RAPAPORT... Lazare Kaplan International provided an operational update on its third fiscal quarter that ended on February 28, for which revenue declined 5.9 percent year on year to $14.3 million. Net sales fell 9.2 percent to $13.9 million primarily due to a decrease in sales of commercial (non-branded) polished diamonds. Lazare Kaplan reiterated its intention to file official quarterly and annual financial reports dating back to May 31, 2009, only after it has resolved material uncertainties concerning the recovery of certain assets and its potential obligations under certain lines of credit and a guaranty. Lazare Kaplan has been unable to finalize its financial statements due to litigation with KBC Bank N.V. and Antwerp Diamond Bank N.V. Lazare Kaplan denies that any amount is currently due or owed to Antwerp Diamond Bank under a $45 million facility and further denies that any action under that agreement be brought by the bank in the courts of Belgium. In the U.S. court system, Lazare Kaplan is seeking, among other things, in excess of $500 million in damages that could be trebled under the Racketeer Influenced and Corrupt Organizations Act (RICO) and state law against the banks. The company alleges that the banks engaged in money laundering and other illegal activity that includes the theft of over $135 million from the sales of diamonds belonging to Lazare Kaplan and its affiliates.
In the most recent court updates, on November 8, 2013, after hearing from all parties, the U.S. District Court substantially endorsed Lazare Kaplan's request for discovery related to the banking arrangements with Antwerp Diamond Bank and KBC and the parties are currently engaged in that discovery process.
The Antwerp Court of Commerce has currently scheduled hearings on December 18, 2014. However, Lazare Kaplan appealed a prior ruling by the Antwerp Court of Commerce and those hearings are scheduled for December 18, and may therefore depend on a prior disposition of the case by the Antwerp Court of Appeals scheduled for hearings on November 4. The company believes that the continued existence of this litigation and the remaining uncertainties have a significant and detrimental effect on its ability to transact business.
Additionally, Lazare Kaplan stated that rough diamond prices charged by producers have generally been rising ahead of polished diamond prices, placing significant pressure on diamond manufacturers.
|