TORONTO, Jan. 17, 2013 /PRNewswire/ - Harry Winston Diamond Corporation (TSX:HW, NYSE:HWD) (the "Company") reports that C. Fipke Holdings Ltd. ("Fipco") has commenced an action in the Ontario Superior Court of Justice against BHP Billiton Canada Inc. and certain of its affiliates (collectively, "BHP Billiton"), the Company and its subsidiary, Harry Winston Diamond Mines Ltd., as well as against Dr. Stewart Blusson ("Blusson") and Archon Minerals Limited ("Archon"). The claim alleges that the offers made by BHP Billiton to Fipco do not comply with Fipco's pre-emptive rights under the joint venture agreements for the Ekati Mine, and that the Company was complicit in this alleged non-compliance.
As disclosed in the Company's news release dated November 13, 2012, the Company has agreed to purchase from BHP Billiton an 80% interest in the Core Zone Joint Venture and a 58.8% interest in the Buffer Zone Joint Venture. As contemplated in the share purchase agreements, BHP Billiton offered its interests in the joint ventures to Fipco, Blusson and Archon, the minority joint venture parties. Fipco, which holds a 10% interest in each of the Core Zone and Buffer Zone Joint Ventures, also alleges in its statement of claim that, among other things, the Company's debt financing arrangements for the acquisition have interfered with Fipco's ability to arrange its own financing. The claim seeks an order of the court prohibiting the Company from purchasing BHP Billiton's interests unless and until BHP Billiton provides Fipco with revised offers. Blusson, who holds a 10% interest in the Core Zone, and Archon, which holds a 31.2% interest in the Buffer Zone, have not issued a claim against BHP Billiton or the Company in respect of this issue, and have advised that they do not intend to do so.
The parties to the litigation have entered into an agreement which provides for the trial and any appeal to be conducted on an expedited basis, with a view to obtaining a final ruling no later than April 15, 2013. The agreement provides that, if such ruling is in favour of the Company and BHP Billiton, the Company's purchase of BHP Billiton's joint venture interests in the Ekati Mine may be completed before May 15, 2013 without re-triggering the pre-emptive right provisions of the joint venture agreements.
The Company and BHP Billiton believe that the claim by Fipco is entirely without merit, and intend to vigorously defend the action in order to proceed with the purchase and sale of the Ekati Mine. The parties are continuing with the regulatory approval process, and the Company expects to be in a position to complete the transaction following resolution of the litigation.
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