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Ideal Cut Producer Exelco seeks Bankruptcy Protection in U.S.

I can only read the first paragraph because I am too cheap and lazy to pay 1$ lol.

What does this mean in the real world? Is it an omen of things to come?
 
whitewave said:
I can only read the first paragraph because I am too cheap and lazy to pay 1$ lol.

What does this mean in the real world? Is it an omen of things to come?
Click to expand...

Sorry about that..., Here is the full article...

By
Lillian Rizzo

Updated Sept. 27, 2017 2:43 p.m. ET
Belgian diamond wholesaler and distributor Exelco NV, a De Beers-listed customer, has sought chapter 11 protection in the U.S. Bankruptcy Court in Wilmington, Del.

In court papers filed Tuesday, the company listed assets of between $10 million and $50 million, and liabilities of between $50 million and $100 million, according to court papers. Judge Kevin Gross will be overseeing the case. A first-day hearing has yet to be set.

The firm, based in Antwerp, is still listed as one of De Beers’s customers, according to the De Beers website. Exelco was once considered a diamond-trading-company sightholder, meaning it was on the authorized bulk purchaser list of rough diamonds.

Court papers show that Exelco’s ownership is split between Lior Kunstler and Jean Paul Tolkowsky, prominent names in the diamond industry.

While Mr. Kunstler is a third-generation diamantaire—or someone to be considered a specialist in making and cutting diamonds—Mr. Tolkowsky’s lineage dates back seven generations in the diamond industry.

The Tolkowsky diamond dynasty, known for its “Ideal Cut” diamond, dates back to Abraham Tolkowsky in 1800, an artisan that became a jeweler to nobles. The “Ideal Cut” diamond was made popular after the 1920s, and in 2009 Jean Paul Tolkowsky “perfected the Princess Ideal Cut diamond,” which is sold through Signet Jewelers Ltd. The “Ideal Cut” diamonds are available in the U.S. at Kay Jewelers and Jared Galleria of Fine Jewelry.

Exelco, established in 1993, and has two factories in Africa and Thailand, according to De Beers’s website. Exelco’s top three trade creditors—Eurostar Diamond Traders NV, I.D.H. Diamonds NV and Vitraag BVBA—are collectively owed nearly $12 million, court papers show. Antwerp-based wholesaler Eurostar is owed the most, about $6.04 million.

Representatives of Exelco couldn’t be reached for comment.

The chapter 11 filing comes several months after Exelco’s assets were seized by one of its lenders, KBC GroupNV. The bank was later ordered to return the assets by a Belgian court, according to a Bloomberg report. The company was on the hook for repaying €26 million ($30 million) to KBC, and the lender was reported to have searched Exelco’s Antwerp offices, according to Bloomberg.

The diamond industry has been going through a rough patch in recent years, as there has been a decline in demand and low prices for diamonds.

In 2016, De Beers, which is majority owned by global mining companyAnglo American PLC and considered one the largest diamond producers in the world, cut production, which helped keep prices afloat, The Wall Street Journal previously reported.

The law firm of Hughes Hubbard & Reed LLP is handling the chapter 11 case, number 17-12030.



Corrections & Amplifications
Exelco NV filed for bankruptcy protection in the U.S. An earlier version of this article incorrectly spelled the firm’s name in the headline. (Sept. 27, 2017)

Write to Lillian Rizzo at [email protected]
 
Wow.
 
Every walk of life I know of went through a roud of defeated expectations - of at least this magnitude - since the 00s ... You'd know better what theirs were, @diagem
 
IMO, you can't and couldn't purchase rough Diamonds at the 1st hand (sights at De Beers, Alrosa, Dominion, Argyle etc..., and tenders/auctions) polish it to generics as the industry has been doing for decades and come out a financial winner. This has been going on for quite a few years and the results we are seeing today reflect what I have been writing over the last years.
Why would anyone want to finance a loosing proposition? Rough prices must balance themselves according to polished. After all, consumers are the only ones who have the power to set their purchase price levels. This is a demand driven model and is definitely not what was historically a supply driven model anymore. That's my opinion.
 
diagem said:
Rounds, rounds and more rounds..., Even if they are labeled Ideal, it's not working anymore.
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I agree. If you're in a commoditized business the only way to survive is to be the biggest/lowest cost and these guys don't look like they were either.

The other thing I think we'll see is even more vertical integration. My personal prediction is someone like Hari Krishna is going to either build or buy a retail business in the next 5 years.

If that happens things are about to get REALLY interesting for the retail side of the business.
 
diagem said:
Rounds, rounds and more rounds...
Click to expand...

Not much variety possible if stock on the scale mentioned in the Bloomberg blurbs (<>10ˆ8 ) needs to be moved fast. The sin of finance more than anything - oddly little understood (familiar territory); if anything remains to prove the drive to scale wrong, it is History.
 
HDer said:
I agree. If you're in a commoditized business the only way to survive is to be the biggest/lowest cost and these guys don't look like they were either.

The other thing I think we'll see is even more vertical integration. My personal prediction is someone like Hari Krishna is going to either build or buy a retail business in the next 5 years.

If that happens things are about to get REALLY interesting for the retail side of the business.
Click to expand...

Unfortunately one of the largest added value produced by Diamond manufacturers is offering the lowest price. Bad for business so it seems. It's killing everyone in its path while destroying themselves as well. Banks won't continue to finance such Companies. Unfortunately Indian government is forcing the banks to finance certain sectors, Diamonds being one of them while relatively uncomplicated to do so.

I believe HK Diamonds is already vertically integrated...
 
Well it's like any other commodity industry where the lowest price wins. Our food is mainly produced by a small number of huge companies, so is our oil, so are our consumer goods and electronics.

Only way to survive in the long run in commoditized industries is either find a way to sell at the lowest price, or to find a specialty niche, like you and the other people on this forum are doing.

Regarding HK, I should have been more specific. Are they currently selling direct to consumer beyond the occasional trade show? Based on what I've seen from their investments into their website and customer service I'd expect that they or one of their competitors would enter into the direct to consumer market in the next 5 years (maximum 10).
 
Yoram,
Flash in the pan or more going down in your opinion?
 
Karl_K said:
Yoram,
Flash in the pan or more going down in your opinion?
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Rumors are that 3-4 of the huge conglomerates are offering 30 cents to the $ on their current debts. We'll have to wait and see how the banks handle such heavy debt burden by the top Indian cutters...
One thing is for certain..., diamonds are NOT a commodity and can't really be compared to a commodity. Rapaport has been trying unsuccessfully for years to commoditize his "specs". Spending loads of $$$ with no success so far.
Like I said. Either rough must go down or polished must go up. Right now with a $17 Bill debt burden seems like the banks are in a weak spot.
 
diagem said:
Rumors are that 3-4 of the huge conglomerates are offering 30 cents to the $ on their current debts. We'll have to wait and see how the banks handle such heavy debt burden by the top Indian cutters...
One thing is for certain..., diamonds are NOT a commodity and can't really be compared to a commodity. Rapaport has been trying unsuccessfully for years to commoditize his "specs". Spending loads of $$$ with no success so far.
Like I said. Either rough must go down or polished must go up. Right now with a $17 Bill debt burden seems like the banks are in a weak spot.
Click to expand...

For your customers they're not a commodity, but can you say the same for the Kay's and Zales of the world?

Bad (or good if you're a consumer) scenario:
Banks repo all the diamonds and auction them off to the highest bidder.
Polished prices take a huge dive as there's not enough capital out there to absorb all of the supply.
Great diamond crash of 2018: once in a lifetime buying opportunity?
 
Thanks Yoram
Interesting times in the diamond industry.
 
... while HK loans itself diamonds. Very old school concept of a Gem !

Perhaps an obscure bit of humour: in more ways than one, the degrading debt must be resolved by splintering into greater diversiy of form ... I wonder who will recognize that this is also a way to think of the physical form of diamonds.
 
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HDer said:
For your customers they're not a commodity, but can you say the same for the Kay's and Zales of the world?

Bad (or good if you're a consumer) scenario:
Banks repo all the diamonds and auction them off to the highest bidder.
Polished prices take a huge dive as there's not enough capital out there to absorb all of the supply.
Great diamond crash of 2018: once in a lifetime buying opportunity?
Click to expand...

Don't know of many bank repo's in the industry..., Usually the players stay with their stocks and their money (debts).

2008 was a once in a generation. Next time will be in another generation IMO.
 
valeria101 said:
... while HK loans itself diamonds. Very old school concept of a Gem !

Perhaps an obscure bit of humour: in more ways than one, the degrading debt must be resolved by splintering into greater diversiy of form ... I wonder who will recognize that this is also a way to think of the physical form of diamonds.
Click to expand...

At present it seems that conglomerates which owe hundreds of millions sleep well at night while their creditors less.:sleep:
 
The debt will have too be transformed into longer term assets. The diamonds must have another fate - I imagine they do not rot, but the pile will change value too & some may be put to great use.

-
RE. generations - the nineties in Eastern Europe was approx. nine generations worth - just counting three countries I knew the banks of best. Now, I see it all once again - slightly eastward. IHMO, nothing has a price ...
 
valeria101 said:
The debt will have too be transformed into longer term assets. The diamonds must have another fate - I imagine they do not rot, but the pile will change value too & some may be put to great use.

-
RE. generations - the nineties in Eastern Europe was approx. nine generations worth - just counting three countries I knew the banks of best. Now, I see it all once again - slightly eastward. IHMO, nothing has a price ...
Click to expand...
everything has a price if there is purpose?
 
diagem said:
everything has a price if there is purpose?
Click to expand...

I suspect we are in agreement: my saying that nothing has a (certain) price, does not disagree with your saying that prices come from any specific purpose - or taste, I'd add ...

[too abstract]
 
2 points val I have read your post 3 times and am still going huh?:confused:
btw awesome to see you posting again!!!!
 
I am wondering if something is lost in translation??
 
Hi valeria!!! Long time! Good stuff Y.
 
@OoohShiny @Karl_K , Ouch ! & Thanks for asking.

I was thinking of how prices for diamonds form, accounting for unchangeable natural characteristics (e.g. the % of rough of some type or other), or for RTW. The various business cases tell of how these sides of the market connect, or fail to. The types of transactions that yield a price for diamonds change accordingly, and so might prices & terms between various parties. This could be a long story & not very interesting, not least because I am not expecting change to reach public price lists; SUM: much ado about nothing - from the point of view of an orthodox buyer.

Yet, I am interested ...

It is crystal clear that the diamonds that excite me are never going to be indexed to the Rappaport lists & would be the footnote of any audit, if even ... These things have no price until one asks for them; in my case, the asking is barely likely via some un-likely business of the kinds that happen to become possible in times of change like these.
 
diagem said:
Rounds, rounds and more rounds..., Even if they are labeled Ideal, it's not working anymore.
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And add more facets and arrows.
 
Rhino said:
Hi valeria!!! Long time! Good stuff Y.
Click to expand...

Good to hear from you !

Of course I've heard of the news ... Noroc bun !
 
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