The union representing 400 Dominion Diamond Mines employees is attempting to guarantee that the company honours its multi-million dollar pension shortfall as it goes through a court-ordered creditor protection process.
If the shortfall isn’t prioritized, the Union of Northern Workers said it’s concerned that active members and pensioners would all face reduced pensions. “How much that would affect those pensioners and the current participants is not known, and would have to go through the court process to wind up and assign those assets,” says union president Todd Parsons.
He said the union is attending all of Dominion Diamond’s court hearings to advocate for its members. “The union will take the position [that] the pension earnings should be a priority before creditors are considered, in the event that this company is unable to succeed.”
According to its most recent valuation, Dominion Diamond’s defined benefit pension plan had $90.3 million in assets and a $99.5-million windup liability as of Jan. 1, 2019, leaving the company with a roughly $9-million shortfall.
However, according to a sworn affidavit by Kristal Kaye, Dominion Diamond’s chief financial officer, the deficit had risen to $20.3 million as of Dec. 31, 2019, with its obligations sitting at $111.6 million and its assets at $91.2 million. Kaye noted those figures “may have changed materially given recent market volatility and interest rate changes.”
The Union received documentation on the $9-million shortfall in April, says Parsons, but only learned about the larger deficit figure through Kaye’s submission to the court. “The union is trying to better understand that number and we’ve requested additional documentation from [Dominion Diamond].”
The company, which operates two diamond mines in the Northwest Territories, sought creditor protection in April when it couldn’t pay a US$20-million interest payment and another $16-million payment to its joint venture partner on one of its operations. Missing those payments could have led to a cascade of defaults, said Kaye in the affidavit, and could ultimately bankrupt the company.
In an emailed statement to Benefits Canada, Pat Merrin, chief executive officer of Dominion Diamond, said the company’s commitments to employees and local communities remain a priority. “We are working diligently to secure sufficient financing to continue operations and allow Dominion to emerge from the [Companies’ Creditors Arrangement Act] process an even stronger company.”