Diamond manufacturer and DTC Botswana sightholder Lazare Kaplan Botswana (LKB), a wholly owned subsidiary of Lazare Kaplan International (LKI), says it plans to move forward with the delayed US$333 million financing facility intended to financially assist the country's downstream diamond processing sector, according to Mmegi Online, as DIB Online writes.
This is despite reports that have surfaced in the international media about LKI's financial setbacks. The diamond company's August 31st filing with the U.S. Securities and Exchange Commission (SEC) stated that it anticipated net sales of US$152.4 million for fiscal 2010, down from US$192.4 million in fiscal 2009. Moreover, the company wrote that while there were "early signs of improving industry trends, current adverse conditions continue to impact the sectors of the diamond and jewelry industry in which the Company operates."
Furthermore, in the document, LKI notified the SEC of late filing pertaining to its annual report for fiscal year ended May 31, 2010, due to its inability "to resolve a material uncertainty concerning (a) the collectability and recovery of certain assets, and (b) the company's potential obligations under certain lines of credit and a guaranty." The company explained that as "it is unable to assess the potential effect the ultimate resolution of these matters will have on the financial position and results of operation of the company, the company has been unable to finalize its financial statements for Fiscal 2010 or file its 2010 Form 10-K."
The filing stated that the company has also been unable to finalize its financial statements for the fiscal year ended May 31, 2009, as well as for the fiscal quarters ended August 31, 2009, November 30, 2009 and February 28, 2010.
However, in a recent interview in Gaborone, managing director of LKB, Alfred Dube, denied rumors that his company is in financial distress and declared that operations at LKB and all of its subsidiaries around the world were running smoothly.
Commenting on the US$333 million Overseas Private Investment Corporation (OPIC) facility, which, sources say, was supposed to be in place 10 months ago, Dube told Mmegi Online that the U.S. government agency is currently in negotiations with Botswana's Ministry of Minerals, Energy and Water Resources and other banks for the facility to be put in place. However, no time frames have reportedly been set.
The facility, first approved in October 2008, was initially a US$250 million guarantee facility provided by OPIC to U.S.-based diamond supplier LKI, which would then pass on the guarantee to participating banks. One such bank, ABN AMRO, which created a local branch in Gaborone for the purpose of carrying out the facility, was to add an additional US$83 million to the overall facility.
However, Dube told Mmegi Online that LKB is talking to other banks regarding the facility's progress and that the LKI subsidiary has not been in contact with ABN AMRO for months.
Meanwhile, sources say that the chief executive officer of the International Diamond and Jewellery Group of ABN AMRO Bank, Victor van der Kwast, said the bank is preparing to approach OPIC to discuss the way forward, reports Mmegi Online.
It remains to be seen whether the facility can go ahead with just one of the two original partners, or if the two parties will be in contact with each other about how to proceed with the facility together.
