Stornoway Diamond (TSX-SWY)

Stornoway Diamond (TSX-SWY), a Montreal, Quebec-based diamond mining company that owns and operates Quebec's first and only diamond mine, obtained protection under the CCAA on September 9. Construction of the company's mine in Northern Quebec commenced in 2014, funded by a $946.0 million financing package that included equity, senior and convertible debt, equipment financing and the world's first ever diamond stream. The project was heavily supported by the Quebec government, which considered the mine an integral component of its "Plan Nord" initiative to enable development of the northern part of the province and its local communities. Commercial production commenced in 2017, but the mine's performance fell significantly short of expectations as a result of delays in the ramp-up of the mine, lower grade ore, and higher-than-anticipated levels of diamond breakage. Adding to the company's difficulties was a declining price for rough diamonds. When production commenced, the market price was US $147/carat. By the second quarter of 2019, the price was only US $76 / carat. Unable to operate profitably under its current conditions, and with no additional liquidity available, the company concluded that it had to restructure its balance sheet and launched a sale and investment solicitation process in April 2019. The process led to a proposed transaction with certain of the company's existing stakeholders, which the company will attempt to complete while under creditor protection. Deloitte was appointed monitor. Counsel is Norton Rose Fulbright for the company, Osler for the monitor, McCarthy Tétrault for Investissement Québec and Diaquem and Fasken for the Caisse.