Tiffany Sells Aber Holding

Luxury retailer Tiffany & Co. sold today its 8 million shares in Aber. The surprising news follows a change in the agreement between the two announced yesterday that eliminated certain restrictions on the sale of Aber shares held by Tiffany and the departure of Tiffany CFO James Fernandez from Aber’s board of directors.

The other change in the agreement between the two is the elimination of a discount on rough diamonds Tiffany purchases from Aber.

Tiffany, on the down side, will buy rough diamonds from Aber at full market value. On the other hand, as part of the change in agreement Aber will pay $5 million, and Tiffany got $268 million from the sale of shares.

It all smells like Tiffany is making some strategic changes, yet to become fully clear in the market.

The shares were sold in a brokered transaction led by Merrill Lynch, to several financial institutions.

Tiffany purchased its shares from Aber in a 1999 private placement that provided Aber with the funds to proceed with the early stages of the development of the Diavik Diamond Mine. The diamond sales agreement, completed at the same time, provided Aber with an off-take arrangement essential to the completion of a bank loan facility that provided the largest portion of Aber's share of the Diavik Project capital requirement without further equity dilution.

Aber says it will now sell its entire 40 percent share of the diamond production from the Diavik Diamond Mine at full market prices.