Image credit: Mountain Province
At its special meeting of shareholders held on September 29, 2020, Mountain Province Diamonds Inc announced that its shareholders had approved two related party transactions that significantly strengthen the Company's financial position as it responds to the challenges posed by the COVID-19 pandemic.
On the onset, certain amendments were made to the Existing Credit Facility, including adjusting the interest rate to a fixed 5% per annum, payable monthly, and removing certain financial covenants under a one-year term. In addition, certain amendments were made to the Existing Credit Facility, adjusting the interest rate to a fixed 5% per annum and removing certain financial covenants under a one-year term. As Mr Desmond has provided a refinancing and extension of the Company's existing $25,000,000 credit facility, the Company paid Mr Desmond a fee equal to 1% of the aggregate principal amount available under the facility. Dunebridge is controlled by Dermot Desmond, an insider and related party of Mountain Province.
Secondly, the disinterested shareholders also approved an increase from $50,000,000 to $100,000,000 in the sales capacity under the existing diamond sales agreement between the Company, certain of its subsidiaries and Dunebridge. The sales capacity increase gives the company the flexibility to sell its run of mine diamonds at prevailing market prices, and potentially share in the future upside if and when Dunebridge elects to sell the diamonds.
The terms of the Transactions were unanimously approved by the independent members of Mountain Province's board of directors. An ad hoc committee of independent directors of Mountain Province, all of whom are independent of management and Mr Desmond undertook a deliberate and full consideration of the Transactions and various alternatives and financing options available to Mountain Province and concluded that the Transactions are reasonable and represent the best options for Mountain Province.
Aruna Gaitonde, Editor in Chief of the Asian Bureau, Rough&Polished
