Dominion Diamond Responds To Expression Of Interest From Washington Corp.

(RTTNews) - Dominion Diamond Corp. (DDC, DDC.TO) confirmed that it has received an unsolicited, conditional and non-binding expression of interest from the Washington Corporations or WashCorps to acquire the Company.

WashCorps submitted a three-page, mostly boilerplate, letter to the Dominion Board on February 21, 2017. Despite the generic nature of the letter and the lack of credibility of WashCorps in the diamond industry and with public company acquisitions, the Board consulted with its advisors and then invited WashCorps to present their expression of interest to the Board at an in-person meeting of the full Board of Directors of Dominion, which was held on March 9, 2017.

Based on the presentation received from WashCorps, and by their own admission, the Board confirmed that WashCorps does not have experience in the highly specialized diamond mining and marketing industry. WashCorps also advised that they did not have any unique plans for the business. Regardless, the Dominion Board carefully considered the expression of interest, including with the benefit of legal and financial advice. While the Board considered the expression of interest to be opportunistic, and believes that it does not recognize all of the value in the Company under its current business plan, the Board told WashCorps that it was prepared to engage in discussions with them on customary terms, including a customary standstill, and allow WashCorps to conduct extensive due diligence on Dominion's unique assets and growth potential in order to improve their expression of interest.

Given the Company's recent update on fiscal 2018 guidance and the complexity of Dominion's assets, to indicate that diligence is confirmatory based on public records is highly questionable. It would also be entirely irresponsible of the Company to allow a third party access to its confidential information without the benefit of customary agreements that protect the interests of shareholders and all of the Company's other stakeholders.

While the Board has repeatedly offered to constructively engage with WashCorps on customary terms, WashCorps continues to demand, as a condition to any discussions, a lengthy period of exclusivity, as well as the ability to veto the Board's choice of new CEO. WashCorps has also refused to accept a customary form of standstill that would restrict it from using the confidential information to acquire control of the Company. These conditions would frustrate the Company's ability to establish its senior leadership, would prevent Dominion from pursuing other value-creating opportunities, beyond the Company's current business plan, and would leave WashCorps free to lower its preliminary, highly conditional expression of interest or take advantage of the Company's confidential information to further its own interests through a subsequent "cashless takeover." In other words, WashCorps is seeking a self-interested "free option" to learn of Dominion's business and prospects, while paralyzing the Company, Dominion said.

Dominion said its board is more than willing to consider all value-creating opportunities for the Company, but it will not do so to the detriment of its shareholders and other stakeholders. The Board of Directors reiterates its openness to engage with WashCorps on customary terms.

In a separate press release, the Washington Companies, a group of privately held North American mining, industrial and transportation businesses founded by industrialist and entrepreneur Dennis R. Washington, said that it has made a proposal to the board of directors of Dominion Diamond Corp. (DDC, DDC.TO) 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.

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.

"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," said Lawrence Simkins, President of Washington.

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, Washington co said.