The Wash­ing­ton Cos. agrees to $1.2B di­a­mond takeover

Do­min­ion to be ac­quired at $14.25 (U.S.) a share

Stockwatch Daily - - FRONT PAGE - Mr. Jim Gowans re­ports

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.

Ar­range­ment agree­ment

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 (karenb@stock­

Thomas A An­druske­vich, Gra­ham G Clow, Trudy Marie Cur­ran, Tim Dab­son, James Kitch­ener Gowans, David Ste­wart Smith, Chuck Strahl, Josef Ve­jvoda

(DDC) Shares: 80,574,557

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