Mountain Province Diamonds entered into a waiver agreement related to its senior secured revolving credit facility agreement with the Bank of Nova Scotia serving as administrative agent and lender and Nedbank serving as lender. The agreement is dated as of Dec. 11, 2017 and also includes 2435572 Ontario Inc., a wholly-owned subsidiary of Mountain Province Diamonds, as borrower and 2435386 Ontario Inc., a wholly-owned subsidiary of Mountain Province Diamonds, as guarantor.
The waiver exempts the company from compliance with financial covenants including the total leverage ratio, total net worth tests that it would otherwise have had to satisfy as of June 30, 2020.
The waiver also removes the borrower’s covenant to maintain a minimum cash balance. In exchange, the company has agreed to a reduction in the size of the revolving credit facility to $25 million from $50 million and the imposition of additional covenants. These covenants include weekly reporting, a covenant with respect to the sale of diamonds and limitations on the payment of bonuses and incentive payments, the incurring of indebtedness, the dispositions of assets and the incurring of liens.
Moreover, the obligors under the credit agreement are required to maintain certain performance metrics with respect to net cash flows and expenditures.
In addition, the borrower is required to demonstrate progress by Aug. 31, 2020 to be able to enter into a binding financing commitment by Sept. 30, 2020 in order to repay the revolving credit facility. The waiver contains customary representations and warranties and events of default.
Mountain Province Diamonds is also continuing its negotiations with its major shareholder and other financial institutions to secure additional debt facilities in order to repay the current lenders and meet short term obligations.
Mountain Province Diamonds is a 49% participant with De Beers Group in the Gahcho Kué diamond mine located in Canada’s Northwest Territories.