The Washington Companies Disclose All-Cash Proposal to Acquire Dominion Diamond Corporation for US$13.50 Per Share
US$1.1 Billion Proposal Would Provide Substantial Premium to Dominion Diamond Shareholders
MISSOULA, Mont.--(BUSINESS WIRE)--The Washington Companies (“Washington”), a group of privately held North American mining, industrial and transportation businesses founded by industrialist and entrepreneur Dennis R. Washington, today announced that it has made a proposal to the board of directors of Dominion Diamond Corporation (TSX: DDC, NYSE: DDC) (“Dominion”) for a transaction in which Washington would acquire all of the outstanding common shares of Dominion for US$13.50 per share in cash, representing a 36 percent premium to Dominion’s closing stock price on March 17, 2017 and a 54 percent premium to the price when discussions ended on March 15, 2017.
“We are disappointed that Dominion’s board has thus far prevented Washington from moving ahead with its proposal under which shareholders would receive a substantial premium and immediate liquidity, but we remain fully committed to completing this transaction.”
The proposal, which was made in a letter to Dominion’s board of directors on February 21, 2017, is not conditional on financing but is conditional on Washington conducting confirmatory due diligence during a period of exclusivity and negotiating an acquisition agreement. After multiple discussions and concessions made by Washington over a three-week period, Dominion’s board of directors continues to refuse to grant Washington access to due diligence, which Washington has stated could lead to an increased offer price, on terms acceptable to Washington.
Washington has a long track record of growing its businesses throughout North America, with expertise in the mining industry and the Canadian market. Washington strongly supports Dominion’s plans to develop the Company's mining assets, while positively impacting current and future employees and benefiting local communities. Washington would provide Dominion opportunities for further growth and work closely with management to put in place an appropriate long-term cost structure to preserve the operational and financial flexibility for management to execute its strategic plan. The nature of the mining business favors an owner such as Washington, which has a deep understanding of the sector, a long-term view and permanent capital to invest in the business over multiple decades.
“We believe our proposal is extremely compelling and clearly in the best interests of Dominion and all of its stakeholders, including shareholders, customers, employees, and communities,” said Lawrence R. Simkins, President of Washington. “If the transaction is consummated, it would provide Dominion shareholders with a substantial cash premium and offer superior value to that which Dominion could realize through ongoing execution of its plan or any other available alternative transaction. As a part of Washington, Dominion would receive significant, long-term investment to develop its most promising growth assets, creating meaningful opportunities for its employees and the communities in which it operates.”
Mr. Simkins continued, “We are disappointed that Dominion’s board has thus far prevented Washington from moving ahead with its proposal under which shareholders would receive a substantial premium and immediate liquidity, but we remain fully committed to completing this transaction.”
Background On Discussions
Following Washington’s proposal to Dominion’s board of directors on February 21, 2017, the companies engaged in discussions and an in-person meeting to discuss the terms upon which Washington would be given access to due diligence and a potential path forward. On March 15, 2017 the Dominion board of directors advised that it would not grant Washington access to due diligence unless Washington agreed to a broad 12-month standstill and would not agree to an exclusivity period as requested by Washington for it to complete its due diligence. Despite reasonable accommodations, which included Washington agreeing to a partial standstill providing that it would not acquire shares, make an unsolicited offer or sponsor a proxy fight during the standstill period and offering generous carve-outs to its exclusivity request, Dominion still refused. Washington made it clear to Dominion that, while it would agree to certain standstill restrictions, under no circumstances would it agree to be restricted from publicly disclosing its proposal if the parties could not come to a definitive agreement. As a result, discussions have ended.
The proposal letter sent by Washington to Dominion Diamond’s board of directors on February 21, 2017 follows:
February 21, 2017
STRICTLY CONFIDENTIAL
James Gowans, Chairman,
and the Board of Directors
Dominion Diamond Corporation
4920-52nd Street Suite 1102
Yellowknife, NT I X1A 3T1 I Canada
Dear Mr. Gowans and Directors:
The Washington Corporations ("Washington" or "we") are pleased to submit this non-binding proposal to acquire 100% of the equity of Dominion Diamond Corporation (the "Company" or "you") in an all-cash transaction (the "Proposed Transaction") on substantially the terms described in this letter.