Tiffany & Co. has warned it may take control of assets from the Canadian mining company Diamcor after Diamcor failed to repay a debt of CAD 3.5 million (USD 2.4 million).
The two companies had a long-term partnership, where Tiffany had the option to purchase all of Diamcor’s rough diamond production at market prices. In return, Tiffany provided financing for the expansion of Diamcor’s Krone-Endora at Venetia project in South Africa.
However, Diamcor struggled to repay a loan of CAD 6.8 million (USD 4.7 million). Due to poor market conditions, Tiffany reduced the loan amount to CAD 3.5 million (USD 2.4 million) last December.
The terms of the loan required Diamcor to make the first payment within 90 days and the second one a year later. Diamcor has not met these obligations.
In response, Tiffany has issued a section 244 notice under the Canadian Bankruptcy and Insolvency Act. This means that if Diamcor does not make the payment within 10 days from June 13, Tiffany will have the legal right to seize Diamcor’s assets, including shares in its subsidiary, DMI Diamonds South Africa.
Both companies are actively discussing potential solutions and are working to resolve the situation without resorting to asset seizure.
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