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Dominion’s Ekati Sale Falls Through
Oct 11, 2020 7:49 AM
By Rapaport News
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RAPAPORT... Dominion Diamond Mines’ sale of Ekati is off the table after the buyer failed to agree on an arrangement with insurers to cover future costs of the site.
Affiliates of the Washington Companies, Dominion’s owner, were due to acquire the Canada-located diamond mine for $126 million. However, talks between the purchaser and three issuers of surety bonds — Aviva Insurance Company of Canada, Argonaut Insurance Company and Zurich Insurance Company — reached an “impasse,” Dominion said Friday.
The surety bonds totaling CAD 280 million (about $214 million) provide a guarantee for the expenses Dominion will incur when it restores the Ekati site following the end of production. The terms of the sale required the issuers and the buyer to decide on how they would deal with the bonds.
“There is no reasonable prospect of reaching a satisfactory agreement among them,” according to Dominion, which entered insolvency protection in April due to the impact of the coronavirus crisis.
The affiliates of Washington Companies were the only parties to make a qualified bid for Ekati, Dominion noted. As a result, Dominion does not expect to be able to complete the transaction, and is considering alternative steps, it added. Dominion also said it would be “impractical” to seek court approval for the takeover, which was due to be the subject of a court hearing this Wednesday.
Dominion will remain in creditor protection until November 7 unless it secures an extension.
Image: A truck at the Ekati mine. (Dominion Diamond Mines)
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Tags:
Argonaut Insurance Company, Aviva Insurance Company of Canada, Dominion, Dominion Diamond Mines, ekati, Ekati mine, Rapaport News, Washington Companies, Zurich Insurance Company
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