Fitch: Northwest Acquisitions notes BB, revolver BB+

Fitch Ratings said it assigned a long-term issuer default rating of BB- to Northwest Acquisitions ULC.

The agency also assigned a BB/RR2 to the new $550 million senior secured second-lien notes due 2022 and a BB+/RR1 to the $200 million senior secured first-lien revolving credit facility.

Note proceeds will be used together with a cash equity contribution from Washington Cos. to acquire Dominion Diamond Corp. After the acquisition, Dominion Diamond is to be amalgamated into Northwest Acquisitions.

The revolver and notes are to be secured by diamond inventories and stockpiles, equity in partially owned joint ventures, and equity and development assets at the 100% owned Buffer JV. There are to be restrictions on borrowing and asset pledges at the JV level thereby reducing the risk of structural subordination.

Fitch said the ratings reflect the issuer's modest size, concentrated operations, variable production, industry concentration, the agency’s expectation of low financial leverage, strong margins, negligible country risk and the expectation of positive free cash flow on average.

The stable outlook reflects Fitch's expectation that the issuer will complete the development of Misery Deep and Sable.

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