Mountain Province Diamonds Inc. (MPVD) Earnings Call Transcript & Summary

Hello, and welcome to the Special Meeting of Shareholders of Mountain Province Diamonds. Please note that today's meeting is being recorded. [Operator Instructions] It is now my pleasure to turn today's meeting over to the Chairperson, Mr. Mark Wall, President and CEO of Mountain Province Diamonds. Mr. Wall, the floor is yours.

Thanks, Mandeep. Good morning, and welcome to the Special Meeting of Shareholders of Mountain Province Diamonds. My name is Mark Wall, and I'm the President and CEO of Mountain Province and a member of the Board of Directors. I will act as Chair of this meeting and ask Mr. Steven Thomas, VP Finance and Chief Financial Officer of the corporation, to act as secretary of this meeting. As this meeting is held virtually via webcast, I would like to set out a few rules for the orderly conduct of the meeting. One, questions in respect of a motion can be submitted to our moderator by any registered shareholder or duly appointed proxy holder using the message service of the virtual interface. Two, when asking a question, please indicate which entity you represent, if any, and confirm that you are a registered shareholder or a duly appointed proxy holder. Three, for the purposes of the meeting today, voting on all matters will be conducted by electronic ballot. Registered shareholders and duly appointed proxy holders will be asked to vote on the sole business item after the presentation of same. Four, when you are asked to vote, you will receive a message on the virtual interface requesting you to register your votes. You will have a certain amount of time to do so when the polls are open. Before we commence, I would like to introduce the directors and senior management of Mountain Province, who are present virtually at this meeting. The directors present other than myself are Karen Goracke, Daniel Johnson, Ken Robertson and Kelly Stark-Anderson. The other members of management present are Steven Thomas, VP Finance and Chief Financial Officer; Matt MacPhail, Chief Technical Officer; Dr. Tom McCandless, Vice President, Exploration. Following the formalities, we will answer any questions submitted by registered shareholders or duly appointed proxy holders through the messaging service of the virtual interface. I will ask that the meeting come to order. In order to make best use of our time and to expedite the formal portion of this meeting, we have asked certain shareholders or proxy holders to move and second the formal motions. Roxanne Parsaud of Computershare is hereby appointed as scrutineer to report on the shareholders attending the meeting and the number of shares represented at this meeting or by proxy at this meeting and any adjournment hereof and to compute the votes of any poll taken at this meeting and any adjournment hereof and to report thereon to me on these matters. The notice call in this meeting and a formal proxy were mailed to all registered shareholders in accordance with the National Instrument 54-101 of the Canadian Securities Administration. The affidavit of mailing has been duly filed, and I direct that the affidavit be attached to the minutes of this meeting as a schedule. A quorum for the transaction of business at a meeting of shareholders is at least 2 persons present in-person or virtually, each being a shareholder entitled to vote at the meeting or duly appointed proxy or representative for an absent shareholder so entitled. The scrutiny has reported to me that we have a quorum. So the scrutineers' report shows a quorum review present, and I, therefore, declare the meeting to be regularly constituted. I direct the report of the scrutineer the annex to the minutes of this meeting as a schedule. Daniel Johnson and I will now briefly describe the rationale for the resolution before us today. In light of the maturity of the corporation's 8% senior secured second lien notes, due on December 15, 2022, which I will hereafter refer to as the existing notes, the corporation's cash balance and the corporation's operational cash flow means -- the Board determined it would be in the best interest of the corporation to review, evaluate and consider options to refinance all or a portion of the existing notes as well as any other potential alternative transactions intended to improve the corporation's short- and long-term financial liquidity needs that may be identified. The Board established a special committee of independent directors in connection with the consideration and oversight of a potential refinancing of all or a portion of the existing notes as well as any other potential alternative transactions. Daniel Johnson is the Chair of the Special Committee, and I'll now turn it over to Daniel to discuss the special committee's process in connection with the proposed transaction shareholders are considering today.

Thank you, Mark and thank you to all shareholders and proxy holders for joining today. As Mark mentioned, the special committee was established in connection with the consideration and oversight of a potential refinancing of all or a portion of the existing notes as well as any other potential alternative transactions. The special committee is comprised of directors who are disinterested in the proposed transaction being considered by the corporation shareholders today and independent for the purposes of corporate and security laws. In October 2022, the corporation received a proposal from 3 holders of the existing notes. These holders include certain entities ultimately beneficially owned by the corporation's largest shareholder, Mr. Dermot Desmond, and 2 third-party investors unrelated to the corporation. The proposal involves a new issuance of second lien notes to refinance a majority of the existing notes with the remaining portion of the existing notes being repaid with cash on hand. Following negotiations with the potential investors, it was determined that's subject to disinterested shareholder approval, the corporation would issue USD 195 million of new second lien notes due in 2025, which I will hear after refer to as the new notes to refinance approximately USD 189 million of the existing notes, which represent a 3% original issue discount on the new notes. In accordance with this mandate, the special committee oversaw the negotiation and execution by the corporation of a nonbinding term sheet setting out the terms of the new notes. The special committee has formally met regularly in connection with this evaluation oversight of the proposed transaction. The Special Committee was advised by legal and financial advisers and consider the factors and potential risks associated with the proposed transaction set out in the Management Information Circular. The special committee reviewed and considered the proposed transaction and giving due consideration to the best interest of the corporation, current market conditions, and the impact of entering the proposed transaction on shareholders and the corporation's other shareholders, unanimously concluded that the proposed transaction is in the best interest of the corporation and that the terms of the proposed transaction are reasonable in the circumstances. On October 27, 2022, the Special Committee and ultimately all non-conflicted directors following the recommendations of the special committee approved the proposed transaction and resolve to put the proposed transaction before the corporation's shareholders other than those effective -- other than those affiliated with Mr. Desmond or their approval at this meeting as required by the rules of the TSX. Subject to obtaining the required approval of shareholders here today, the final form of the definitive documents in respect of the proposed transaction are recommended by the special committee and approved by the non-conflicted directors of the Board. Mark -- and on behalf of the Special Committee, I will be happy to address any questions later in the meeting. I will now turn it back over to Mark to attend to the formal business of the meeting.

Thanks, Daniel. The first and only item of business is the approval of the refinancing transaction involving the issuance of USD 195 million aggregate principal amount of new senior secured second lien notes to refinance approximately USD 189 million of the company's existing 8% senior secured second lien notes due 2022. May I have a motion to approve the proposed transaction resolution set out in Schedule A to the Management Information Circular.

Mr. Chair, I move that the proposed transaction resolution set out in Schedule A to the management information circular be approved.

Do I have a seconder for this motion?

Mr. Chair, I second the motion.

As we mentioned, voting today will be conducted by electronic ballot. I will now take a moment to ask that the balloting be open to registered holders and appointed proxy holders. The polls are now open, and at this point, all registered holders and proxy holders who have properly logged in with their control numbers or invitation code and wish to vote, we'll be able to see on the screen all motions being brought forth at this meeting. At this point, shareholders and duly appointed proxy holders, that is anyone who logged in with a control number or invitation code will see their screen change to show the proposals and they cast their votes accordingly. Please register your votes by accessing the voting page and selecting the For or Against buttons next to the motion to approve the proposed transaction. We will provide registered shareholders and duly appointed proxy holders approximately 1 more minute to complete the electronic ballot. [Voting]

Once the electronic ballot closes, the voting page will disappear and your votes will automatically be submitted. The balloting is now closed. I've been advised by the scrutineers that the proxies deposited for the meeting have been voted in favor of the resolution presented. The entry into the proposed transaction has been approved. I direct that the final results of the poll will be included with the minutes of this meeting and the results of the voting will be announced in a press release in accordance with the policies of the TSX. The formal items of business as set out in the notice of this meeting have now been dealt with. I move and second that this meeting now terminate. As there is no further business to come before the meeting, I declare the formal part of this meeting to be concluded. We will now take questions that shareholders may have. [Operator Instructions]. For each question we answer, our moderator will summarize the question and read out loud the name of the person who asked such question, and if applicable, the entity such person represents. We would like to remind you that questions which were already answered although they are redundant or repetitive will not be published nor answered. Matt, are there any questions?

Mr. Chair, no questions on the webcast platform.

Okay. Thanks to everyone for your attention, and this meeting is now closed.

This concludes the meeting. You may now disconnect.