Tiffany & Co. has filed a notice stating it intends to enforce an agreement with Diamcor Mining to take control of its assets following the latter’s default on repayment of a loan.
The LVMH-owned jeweler sent the miner, which owns the Krone-Endora at Venetia project in South Africa, a section 244 notice under the Bankruptcy and Insolvency Act on Friday. That notice states that in the event of a default on the loan Tiffany provided Diamcor, the retailer has the right to enforce its security against all of the miner’s personal property and the shares the company holds in DMI Diamonds.
In December, Tiffany forgave approximately half the loan as the miner was unable to repay due to the weak market and a slowdown in demand for its rough diamonds. That left CAD 3.5 million ($2.4 million) of the CAD 6.8 million ($4.7 million) original sum still to be repaid. Diamcor was required to return the funds in two stages: the first to be transferred 90 days after signing the agreement, with the remainder due one year later.
Tiffany and Diamcor previously had a long-term alliance whereby the jeweler had the rights to purchase up to 100% of all future production from the miner at market prices. In return, Tiffany provided the company with financing to expand its deposit. Additionally, former Tiffany executive D. Wayne Howard joined Diamcor’s board of directors last year.
The 244 notice states Tiffany must give Diamcor 10 days’ notice of its intention to take the miner’s goods. In the meantime, the parties are currently exploring alternatives to the enforcement, Diamcor added.
Image: Rough diamonds. (Diamcor Mining)
