Arctic Canadian Diamond Company acquisition of the Ekati Mine

On February 3, 2021, Arctic Canadian Diamond Company Ltd. (“Arctic”), a company formed and owned by funds and accounts managed by DDJ Capital Management (“DDJ”), Brigade Capital Management, LP (“Brigade”) and Western Asset Management Company, LLC (“Western Asset”), announced that it completed the acquisition of the Ekati Diamond Mine (“Ekati”) and associated assets from Dominion Diamond Mines ULC and certain of its affiliates (collectively, “Dominion”).

Under the terms of the agreement, announced on December 7, 2020 and approved by The Alberta Court of Queen’s Bench (the “Court”) on December 11, 2020, Arctic purchased from Dominion substantially all of its assets, excluding Dominion’s joint venture agreement and liabilities relating to the Diavik Diamond Mine, in exchange for

1. the assumption of US$70 million of Dominion’s outstanding indebtedness under its existing revolving credit agreement, dated November 1, 2017, as amended with the first-lien lenders
2. the assumption of C$279 million of indemnity and related obligations under Dominion’s surety bonds issued by Aviva Insurance Company of Canada, Argonaut Insurance Company and Zurich Insurance Company Ltd. (the “Surety Bond Issuers”), under the terms and conditions set out in certain support confirmations provided by the Surety Bond Issuers to Arctic on December 4, 2020; 
3. permission for the working capital facility to be utilized to satisfy cure cost payments to certain trade creditors of Dominion at the closing of the transaction; and
4. the assumption of various additional pre-filing liabilities related to the company’s employees.

In addition, Arctic received a new US$85 million fully funded working capital facility ranking behind the first lien lenders.

As part of the transaction, Arctic did not assume any liabilities in respect of Dominion’s senior second-lien notes with an outstanding principal amount of US$550 million or in respect of pre-filing credit agreement indebtedness relating to C$105 million in letters of credit issued in connection with the Dominion’s interests in the Diavik Mine.

Dominion filed for insolvency protection under the Companies’ Creditors Arrangement Act (“CCAA”) on April 22, 2020, obtaining an order from the Court granting Dominion protection under the CCAA. 

Further information on Arctic’s acquisition can be found on Business Wire’s website.

Arctic is a Canadian mining company and one of the world’s largest producers and suppliers of premium rough diamond assortments to the global market. The company owns a controlling interest in the Ekati Diamond Mine, which it operates. It also holds a controlling interest in the Lac de Gras Diamond Project. Both the Ekati Diamond Mine, and the Lac de Gras Diamond Project are located in Canada’s Northwest Territories.

DDJ is a privately held asset manager that specializes in investments within the leveraged credit markets. It currently manages over US$8 billion in assets on behalf of corporate and public defined benefit plans, Taft-Hartley plans, mutual fund sponsors, foundations, and other domestic and foreign institutional investors. For more information, please visit www.ddjcap.com.

Brigade is a global asset management firm that specializes in employing a multi-strategy, multi-asset class approach to investing across the broad credit universe, with US$30 billion in assets under management.

Western Asset is one of the world’s leading fixed-income managers. With a focus on long-term fundamental value investing that employs a top-down and bottom-up approach, the firm has nine offices around the globe and deep experience across the range of fixed-income sectors.