Harry Winston: Investor claim threatens mine deal
Harry Winston says another Ekati investor seeks to halt mine deal
Harry Winston Diamond Corp. said Thursday that another investor in the Ekati Mine in Canada has filed a lawsuit seeking to halt its purchase of the site.
The high-end jewelry and diamond company announced in November that it would spend $500 million to acquire BHP Billiton Canada's controlling interest in the Ekati diamond mine. The mine includes a "core zone," which includes the current operating mine, and a "buffer zone," an adjacent area with both development and exploration potential. The two zones are operated under separate joint venture agreements.
C. Fipke Holdings Ltd., which holds a 10 percent stake in both the core zone and buffer zone joint ventures, has filed a claim in a Canadian court associated with the deal.
Fipke claims that BHP did not comply with the pre-emptive rights to the mine under the joint venture agreement. It also alleges that the debt financing arrangements associated with the deal have interfered with Fipke's ability to arrange its own financing.
A call to Charles Fipke, the man behind the holding company, was not immediately returned for comment.
According to Harry Winston, Fipke is asking the court to prohibit its purchase of BHP's stake until BHP provides Fipke with revised offers. The other stakeholders in the mine, Dr. Stewart Blusson and Archon Minerals Ltd., have not filed a claim and have indicated to Harry Winston that they do not intend to do so.
All the parties in the litigation have agreed to move quickly on the case and are seeking a final ruling by April 15 at the latest.
Harry Winston and BHP said that Fipke's claim is entirely without merit and intend to defend their case and move forward with the deal.
Harry Winston made news earlier this week with a deal to sell its watch and jewelry brand to Swiss watch maker Swatch. Harry Winston plans to focus on diamond mining and rename itself Dominion Diamond Corp.
Harry Winston shares slipped 35 cents to $14.53 in afternoon trading. Its shares have traded between $10.54 and $16.14 in the past 52 weeks.
