Stornoway Diamond Corporation announced that it had closed its previously announced financing transactions with US private equity firm Orion Mine Finance, Investissement Québec (through its wholly owned subsidiaries Diaquem Inc. and Resources Québec) (“RQ”), and the Caisse de dépôt et placement du Québec to fund the construction of the Renard Diamond Project, Quebec’s first diamond mine.
In total C$946 million has been funded, or committed for funding, through a combination of senior and subordinated debt facilities, equity issuances, an equipment financing facility with Caterpillar Financial, and the forward sale of diamonds.
The Financing Transactions are intended to provide a comprehensive funding package for the construction of the Renard Diamond Project. Taken together, the Financing Transactions represent the largest ever project financing package for a publicly listed diamond company.
Concurrent with the closing announced on July 8, 2014, approximately C$464 million in aggregate gross proceeds from public and private offerings of subscription receipts and a private offering of convertible debentures has been released to Stornoway (subject to the payment of certain transaction costs) to allow the immediate commencement of project construction. The proceeds of a senior secured loan, a purchase and sale agreement for the forward sale of diamonds, an equipment financing facility and a cost overrun facility (if and when needed) will be made available to Stornoway in due course in accordance with their terms.
The Financing Transactions included an issuance of approximately C$243 million of common share subscription receipts which were subscribed for by Orion, RQ and the Caisse by way of private placements, and C$132 million of common share subscription receipts which were offered by way of a concurrent public offering in Canada led by Scotiabank, Dundee Capital Markets and RBC Capital Markets.
By way of forward sale of diamonds, Stornoway will sell a 20 per cent undivided interest in the diamonds produced from the Renard Diamond Project for a purchase price in an aggregate amount of US$250 million, in a proportion of 16 per cent to Orion (for US$200 million) and 4 per cent to Caisse (for US$50 million).
The Financing Transactions also include a C$100 million Tranche “A” senior secured loan by RQ (plus an amount equal to the full outstanding principal amount of all loans and other obligations under an existing $20 million bridge facility with Diaquem), with an additional C$20 million Tranche “B” senior secured loan by way of an accordion feature as a cost overrun facility. Convertible unsecured debentures were issued in an aggregate principal amount of US$81.257 million by way of private placements (US$20.500 of which was purchased by Orion), and the Caisse committed to provide an additional C$28 million unsecured non-convertible loan as a cost overrun facility.
Norton Rose Fulbright Canada LLP advised Stornoway, with a team led by Steve Malas (corporate, securities and mining); Amar Leclair-Ghosh (M&A and mining) and Serge Levy (banking and finance – project financing); and including Elliot Shapiro, Solomon Sananes, Amelie Metivier, Nicholas Cerminaro, David Crandall, Peter Riddell, Marly Ochmann St-Jean, Marilyne Rougeau, Laurence Farmer and Renée Loiselle (corporate and securities); Derek Chiasson, Ed Heakes and Antoine Desroches (tax); Miguel Manzano (real estate & mining); Peter Wiazowski and Matthew Bernardo (banking and finance – equipment financing); Bernard Quinn (EPCM/construction); Robert Mason (mining); Martin Thériault, Michele Friel, Aditya Rebbapragada, Mélanie Dupuis-Giuliani and Sandro Muzzo (banking and finance – project financing); and Chris Hilbert and Manny Rivera (US law matters).
Torys LLP advised Orion with a team including Michael Pickersgill, Peter Danner and Shane Attersley (corporate and mining); Tom Zverina and Meno Tessema (lending); Craig Maurice, Jerald Wortsman, David Mattingly and James Guadiana (tax); Omar Wakil and Arezou Farivar (competition).
McCarthy Tétrault LLP advised RQ with a team led by Gary Litwack (capital markets and mining) and Richard O’Doherty (financial services); and including Mary-Jeanne Phelan, Laurent Gauthier and Gadi Taj Ndahumba (financial services); Ryan Rabinovitch and Christian Meighen (tax); Valerie Mac-Seing (real estate) and James Klein (real estate/construction). McCarthy Tétrault also advised Caterpillar Financial with the team of Robert Doyle and Marie-France Gagnon (financial services).
Lavery, de Billy, L.L.P. advised the Caisse and in-house lawyer Anne-Marie Laberge, with a team led by Benjamin Gross (banking and finance) and René Branchaud (securities and mining); and including Dominique Bélisle, Pierre Denis and Darina Bashilova (banking and finance); Josianne Beaudry, Francis Desmarais, Maxime Bergeron and Guillaume Synnott (corporate and securities); Nicolas Gagnon (EPCM/construction); Katia Opalka (environment) and Nicole Messier (real estate and mining).
Blake, Cassels & Graydon LLP advised Scotiabank, Dundee Capital Markets and RBC Capital Markets with a team that included Jeff Lloyd, Richard Turner, John Wilkin, Samir Murji, Anne-Catherine Boucher, Chris Barker and Joe Zed (securities); Bryan Bailey and Peter Lee (tax) and Viorelia Guzun (real estate).