ABN Amro filed an insolvency action against Polar Ice Diamonds of Canada and its subsidiaries on November 3, an action similar to filing Chapter 7 bankruptcy against an entity in the U.S. ABN Amro also sought all fees associated with the action and Polar Ice Diamonds was then placed into receivership by the court.
RSM Richter, acting as the receiver, estimated the “book value” of the company’s assets as $13.5 million, which included $7.7 million in diamond inventory. Richter noted that the actual values were likely to differ substantially following its full review. Polar Ice reportedly owed ABN Amro a combined loan balance of $21.8 million.The diamond firm, which also operates as Polar Bear Diamonds and 4114159 Canada Inc., owed unsecured creditors $20.7 million. Attorneys for Polar Ice would not comment on the case, but a representative from RSM Richter confirmed to Rapaport News that Polar Ice Diamonds was no longer an operating company and that the diamond firm would most likely be unable to pay its debt.
Shortly before filing the insolvency action, Susan Sigda, the vice president of ABN Amro, told the court that the bank had been made aware that Polar Ice’s president, Ronen Basal, had taken $4.5 million worth of diamonds on memo, but had not detailed the inventory. Sigda also told the court that she had learned approximately $3 million worth of diamonds were being held at an outside location “where proper documentation has not been supplied to the bank.” At press time, the creditors in question had not been required to file a proof of claim with the receiver.
Survival International Renews Call to Boycott Botswana Diamonds
Human rights group Survival International called for a boycott of Botswana tourism and diamonds. The organization, which has previously protested De Beers for displacing Bushmen from the country’s Kalahari in order to mine diamonds, claimed that the Bushmen there are still being treated unfairly.
Though De Beers sold its concessions in the Kalahari to Gem Diamonds, Tess Thackara, a spokesperson for Survival International, said the group is specifically targeting De Beers — not Gem Diamonds — because Botswana still owns a 50 percent stake
in Debswana, a joint venture between the country and De Beers. Survival International noted that the Bushmen have been denied access to their wells and that the government drilled new ones for wildlife only with funding from the Tiffany & Co. Foundation. It also allowed the travel company, Wilderness Safaris, to open a luxury tourist lodge on Bushmen land.
Diamond Trading Company Prices Increase
The Diamond Trading Company’s (DTC) November sight achieved an estimated value of $500 million as the De Beers sales and distribution unit implemented price increases. DTC spokesperson Louise Prior confirmed a low single-digit price hike, while industry attendees noted an increase of approximately 5 percent on certain boxes in higher demand. Those boxes included stars and pointer sizes, colored goods and the more commercial Indian items. A large quantity of ex-plan goods that were not included in the intentions to offer (ITO) was supplied at the sight.
One industry professional noted that most sightholders accepted the price hike, as it followed similar increases by other major mining companies and because DTC boxes have been trading at high premiums in the secondary market. As a result, DTC goods are now selling at an estimated average premium of about 4 percent. The same professional also noted, however, that the increase was difficult news for sightholders, as their margins are now being squeezed further.
Others expressed concern that the rough market was in fact buoyant, while polished prices were holding stable. Prior stressed that De Beers does not take a short-term view on market conditions, including reports of shortages in the market. The company previously stated that it would not ramp its production back up to the levels posted in 2007 and 2008 and has maintained a cautious approach to increasing output, after cutting levels during the downturn in 2009.
Prior reported that sightholders appeared to be in a positive mood and that the company had an over application for goods before the sight. She added that a great deal depends upon the outcome of this year’s U.S. holiday shopping season. DTC sight sales have increased by an estimated 49 percent to approximately $4.4 billion for 2010, according to Rapaport News estimates. The tenth and final sight of the year is scheduled to begin on December 13.
Article from the Rapaport Magazine - December 2010. To subscribe click here.