SNR Denton has advised Lucara Diamond Corp. (“Lucara”) on its successful share-for-share takeover of African Diamonds plc (“AFD”), a U.K. company whose securities were traded on the AIM Market of the London Stock Exchange. The acquisition was carried out by way of an English court-approved cancellation scheme of arrangement involving a conditional three-cornered demerger.
Lucara is a Canadian company headquartered in British Columbia with various diamond mining interests in Africa. Its stock is traded on the Toronto Stock Exchange Venture Exchange. AFD was a U.K. company headquartered in Ireland with diamond mining and exploration interests, also in Africa.
Under the scheme, Lucara acquired all AFD’s issued shares. In exchange, Lucara will issue common stock, tradable on the TSX Venture Exchange, to AFD’s former shareholders. Through AFD, Lucara now holds a 100% interest in the AK6 project, an advanced diamond development project located in the Orapa/Letlhakane kimberlite district of Botswana.
At the same time, AFD demerged all of its non-mining interests to a new entity, Botswana Diamonds plc (“BD”), under a three-cornered demerger involving a reduction and return of capital. BD’s shares are to be admitted to trading on AIM, providing existing AFD shareholders with an ongoing tradable investment in AFD’s previous exploration interests.
Nigel Webber, deal partner at SNR Denton, said, “This was a complex transaction involving multiple inter-conditional court procedures and assets located in seven jurisdictions. All parties worked to a demanding timetable and the result is a resounding success. We are delighted with the outcome and look forward to continuing to work together with Lucara. The transaction was a great fit for our growing project and corporate finance practice in the mining and minerals sector. Our network of offices across Africa makes us very well placed to do this kind of work.”
Dominic Sedghi, deal associate at SNR Denton, said, “The combination of a takeover and demerger lent this transaction an element of added complexity but we were able to deal with this elegantly and efficiently in a single scheme.”
William Lamb, President and CEO of Lucara, commented, “This acquisition consolidates ownership of the AK6 project, benefiting all shareholders, and creates a new premier diamond developer in Africa. AK6 is known for its high quality stones and is expected to have a long life mine of 12+ years with substantial expansion opportunities from additional resources at depth.”
The SNR Denton team was led by London partner Nigel Webber and supported by Neil Nicholson and Alex Thomas (partners) and Dominic Sedghi and Suhail Qureshi (associates). The team worked with Canadian counsel Blake, Cassels & Graydon LLP and financial advisers Hayward Securities Inc.
