Orion Mine Finance completes purchase of subscription receipts of Stornoway Diamond Corporation - KPTV - FOX 12

Orion Mine Finance completes purchase of subscription receipts of Stornoway Diamond Corporation

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SOURCE Orion Mine Finance Management I Limited

TORONTO, May 23, 2014 /CNW/ - Orion Mine Finance announced today that Orion Co-Investments I LLC ("Orion Equity Co-Invest"), a company managed by Orion Mine Finance Management I Limited ("Orion"), acquired ownership of 171,254,203 newly issued subscription receipts ("Subscription Receipts") of Stornoway Diamond Corporation ("Stornoway") at a price of US$0.64232 per Subscription Receipt, by way of a private placement for aggregate consideration of US$110,000,000. Based on the Bank of Canada's published noon rate of exchange on May 22, 2014, the foregoing amounts are equal to C$0.70 per Subscription Receipt for aggregate proceeds of C$119,877,942.

The purchase of Subscription Receipts by Orion Equity Co-Invest was part of a larger offering (the "Offering") which involved the issue and sale of an aggregate 345,539,916 Subscription Receipts on a private placement basis (the "Private Placement") to Orion Equity Co-Invest, Caisse de dépôt et placement du Québec and Ressources Québec and the concurrent issue and sale of an additional 188,600,000 Subscription Receipts pursuant to a public offering of Subscription Receipts. The proceeds from the issue and sale of Subscription Receipts pursuant to the Offering have been deposited in escrow pending the satisfaction of certain escrow release conditions, including the completion of the Financing Transactions (defined below). Upon the satisfaction of such conditions, (i) each Subscription Receipt issued pursuant to the Private Placement will automatically be exchanged for one common share of Stornoway (each a "Common Share"), and (ii) each Subscription Receipt issued pursuant to the public offering will automatically be exchanged for one Common Share and one-half of one common share purchase warrant of Stornoway. In addition, at such time, Orion Equity Co-Invest, Caisse de dépôt et placement du Québec and Ressources Québec will each be entitled to receive their pro rata share of an additional 20,732,394 Common Shares issued to them as a placement fee (the "Placement Fee Shares"). If the escrow release conditions, including the completion of the Financing Transactions, are not satisfied on or before July 1, 2014 (or such later date as may be agreed among Orion Co-Investments I Limited ("Orion Co-Invest"), Caisse de dépôt et placement du Québec, Ressources Québec and Stornoway, but in any event, not later than October 1, 2014), the Subscription Receipts will be cancelled and the purchase price therefor returned to holders.

The Offering itself was undertaken as part of a series of proposed financing transactions (collectively, the "Financing Transactions") involving: (i) the Offering; (ii) a US$250 million forward sale of diamonds by way of a streaming agreement; (iii) a C$100 million Tranche "A" senior secured loan (subject to increase up to an amount of C$20 million plus capitalized interest as a result of a bridge loan to be rolled into the senior secured loan); (iv) a C$20 million Tranche "B" senior secured loan; (v) US$79 million principal amount of convertible debentures (the "Convertible Debentures"), which are convertible into Common Shares at the option of the holder at a conversion price of C$0.945; and (vi) a combined C$28 million in cost overrun credit facilities, all as described in Stornoway's short form prospectus dated May 12, 2014. Pursuant to the Financing Transaction, Orion Co-Invest, an affiliate of Orion, has committed to purchase US$24.09 million of the Convertible Debentures, which would be convertible into 28,041,269 Common Shares (assuming an USD:CAD exchange rate of 1.10:1.00).

Orion did not own, or exercise control over, any securities of Stornoway prior to the purchase of the Subscription Receipts by Orion Equity Co-Invest pursuant to the Private Placement. Following satisfaction of the escrow release conditions, including the completion of the Financing Transactions, Orion would hold 181,529,455 Common Shares upon the exchange of all of the Subscription Receipts and all of the Placement Fee Shares issued pursuant to the Offering, representing approximately 25.6% of the then outstanding Common Shares. In addition, following completion of the Financing Transactions and the resale to a third party of US$4.09 million principal amount of Convertible Debentures to be completed by Orion at or immediately after completion of the Financing Transactions, Orion would hold Convertible Debentures convertible into 23,280,423 Common Shares (assuming an USD:CAD exchange rate of 1.10:1.00 and the sale of ). Assuming conversion of only Orion's Convertible Debentures, Orion would hold an aggregate of 204,809,878 Common Shares, representing approximately 28.0% of the then outstanding Common Shares.

Orion has acquired the Subscription Receipts for investment purposes.  Orion has no current plan or proposal which relates to, or would result in, acquiring additional ownership or control over the securities of Stornoway (other than receipt of the Placement Fee Shares and the purchase of Convertible Debentures as described above). Depending on market conditions, Orion's view of Stornoway's prospects and other factors considered relevant by Orion, Orion may acquire additional securities of Stornoway from time to time in the future, in the open market or pursuant to privately negotiated transactions, or may sell all or a portion of its securities of Stornoway.

Orion's address is Canon's Court, 22 Victoria Street, Hamilton, Bermuda HM12. For further information please refer to the Early Warning Report posted on SEDAR or contact Jeffrey T. Kechejian at (212) 596-3474.

Forward-Looking Information

Certain statements in the press release are forward-looking statements and are prospective in nature, including statements with respect to Orion's future intentions regarding the securities of Stornoway. Forward-looking statements are not based on historical facts, but rather on current expectations and projections about future events, and are therefore subject to risks and uncertainties which could cause actual results to differ materially from the future results expressed or implied by the forward-looking statements. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. Such forward-looking statements should therefore be construed in light of such factors, and Orion is not under any obligation, and expressly disclaims any intention or obligation, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

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