Dominion Diamond Corp., the Canadian mining company that filed for insolvency protection on April 22, has asked a Canadian court to stay its financial obligations for another month as the company weighs its options.
Dominion owns the Ekati mine in Canada’s Northwest Territories (pictured), as well as 40% of the nearby Diavik mine. The other 60% of Diavik is held by Rio Tinto.
The Ekati mine has been on “care and maintenance” since the middle of March due to the spread of COVID-19; Diavik has been operating as usual.
After Dominion Diamond filed its initial petition, the court granted it a 10-day stay period from creditors, which was scheduled to run until May 1.
Its new application, filed Monday in the Court of Queen’s Bench in Alberta, asks for that “breathing room” to be extended until June 1.
“Given a reasonable time to advance the companies’ restructuring efforts, [Dominion’s] management is optimistic that the overall value of their business will likely be enhanced to the benefit of their stakeholders as compared to a forced liquidation scenario,” the application said.
The company is currently owned by Washington Companies, which purchased it in 2017. Washington is now the stalking-horse bidder for the company’s assets.
Washington’s proposal for debtor-in-possession financing involves renegotiation of its current capital structure with creditors and requires the company to solicit other bidders to either acquire its assets or a stake in the company.
Dominion says it is currently evaluating Washington’s offer and “expects as part of the restructuring to obtain new financing.”
It has said that its highly leveraged capital structure, as well as the worldwide shutdown in the diamond market due to the coronavirus pandemic, caused the miner to suffer a “liquidity crisis” that led to the filing for insolvency protection.
The company’s insolvency papers can be seen here.
(Image courtesy of Dominion Diamond Corp.)
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