The Washington Cos. agrees to $1.2B diamond takeover
Dominion to be acquired at $14.25 (U.S.) a share
DOMINION DIAMOND Corp. and The Washington Companies, a group of privately held North American mining, industrial and transportation businesses founded by industrialist and entrepreneur Dennis R. Washington, have entered into an arrangement agreement under which an entity affiliated with Washington will acquire all of Dominion’s outstanding common shares for $14.25 (U.S.) per share in cash or a total equity value of approximately $1.2-billion (U.S.), pursuant to a plan of arrangement under the Canada Business Corporations Act. The transac-
tion represents a 44-per-cent premium to Dominion’s unaffected share price of $9.92 (U.S.) on March 17, 2017. The transaction marks the result of Dominion’s review of strategic alternatives as previously announced on March 27, 2017.
The board of directors of Dominion has unanimously determined that the arrangement is in the best interests of the company, approved the arrangement and recommends that Dominion’s shareholders vote in favour of the arrangement. All directors of the company have entered into support agreements to vote their common shares in support of the arrangement.
“Dominion Diamond has an excellent collection of mining assets and a talented and experienced management team and work force,” said Lawrence R. Simkins, president of Washington. “We are excited to work with their team to extend the mine life of the Ekati mine and continue partnering with Rio Tinto in the operation of the Diavik mine, while maintaining long-term employment for Dominion employees. The Washington Companies has a long track record of building businesses throughout North America, significant experience in mining as well as operating its investments in Canada, and a decades-long investment horizon. We share a commitment to providing long-term benefits to all Dominion stake holders an d to the Northwest Territories and its local communities.”
“The Washington offer delivers compelling and immediate value to Dominion shareholders at an attractive premium that recognizes the intrinsic value of Dominion and provides shareholders certainty through an all-cash offer,” said Jim Gowans, chair of Dominion. “This offer is the result of a robust strategic review process and the board unanimously agrees that this offer represents the best option available to Dominion shareholders, and recommends that shareholders vote in favour of this transaction.”
As part of this acquisition, Washington plans to (among other things):
• Operate Dominion as a stand-alone business;
• Appoint a new chief executive officer based in Canada to the Dominion management team;
• Keep Dominion’s headquarters in Canada and maintain a significantly Canadian management team;
• Deploy capital to develop both the Jay and Fox Deep projects;
• Make new investments in a reinvigorated greenfield exploration program;
• Continue to promote Dominion’s CanadaMark brand for its ethically sourced and premium Canadian diamonds.
The arrangement agreement is subject to customary non-solicitation provisions. The closing of the arrangement is subject to the approval of at least two-thirds of the votes cast at a special meeting of Dominion shareholders to be called to consider the arrangement, the company having a minimum cash balance of $150-million (U.S.) if closing is on or before Nov. 30, 2017, or $200-million (U.S.) if closing is after Nov. 30, 2017, and certain other customary closing conditions, including approval from the Minister of Innovation under the Investment Canada Act and the Commissioner of Competition under the Competition Act. In
connection with the transaction, Dominion will suspend the declaration and payment of dividends on Dominion’s shares and has terminated its normal course issuer bid. The transaction is expected to close in the fourth quarter of 2017.
To finance part of the consideration payable in connection with the arrangement, Washington has obtained fully committed debt financing led by Credit Suisse with Citi, UBS Investment Bank and Natixis acting as joint lead arrangers. The balance of the consideration will be financed with an equity commitment from Washington and cash on Dominion’s balance sheet.
The special meeting of Dominion shareholders is expected to be held in September, 2017.
We seek Safe Harbor.
Karen Baxter condensed this news release (email@example.com).
Thomas A Andruskevich, Graham G Clow, Trudy Marie Curran, Tim Dabson, James Kitchener Gowans, David Stewart Smith, Chuck Strahl, Josef Vejvoda
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