EXHIBIT 99.1
LAZARE KAPLAN ENTERS INTO
SETTLEMENT AGREEMENTS WITH INSURANCE COMPANIES
New York, New York - July 6, 2011 - Lazare
Kaplan International Inc. (LKII.PK) (the “Company”)
today announced that in connection with its efforts to resolve the
Material Uncertainties, described below, which
have prevented it from timely filing its periodic
reports under the Securities Exchange Act of 1934, on July 1, 2011,
the Company and certain of its affiliates entered into a
Confidential U.S. Release and Settlement Agreement with the
underwriters (the “U.S. Underwriters”) of their United
States “All Risks” insurance policies, and a
Confidential U.K. Release and Settlement Agreement with the
underwriters of their United Kingdom “All Risks”
insurance policies. Pursuant to the Release and Settlement
Agreements, the Company is to be paid $32,000,000, in addition to
$28 million previously paid by the U.S. Underwriters pursuant to an
interim payment agreement (i.e., $60 million total), to settle its
claims under the policies, dismiss all pending litigation and
execute mutual releases. The Company retains all of its rights to
pursue recovery of its assets against third parties.
As previously disclosed by the Company in its
Form 8-K filed with the Securities and Exchange Commission on April
14, 2011, among other public filings, the Company has been unable
to resolve a material uncertainty concerning (a) the collectability
and recovery of certain assets, and (b) the Company’s
potential obligations under certain lines of credit and a guaranty
(all of which, the “Material Uncertainties”). As the
Company has been unable to assess the potential effect the ultimate
resolution of these matters will have on the financial position and
results of operation of the Company, the Company had been unable to
finalize its financial statements for any of the fiscal quarters
ended February 28, 2011, November 30, 2010, August 31, 2010,
February 28, 2010, November 30, 2009 or August 31, 2009, or file
its Form 10-Q for any of those periods. Additionally, for the same
reasons, the Company has been unable to finalize its audited
financial statements for the fiscal years ended May 31, 2010 and
May 31, 2009 or file its Form 10-K for either of those
periods.
In an effort to resolve the Material
Uncertainties, the Company, among other things:
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entered into
discussions with various financial institutions related to these
matters regarding resolution of the Company’s potential
claims and repayment of amounts which were asserted as being owed
by the Company to these institutions;
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pursued
recovery of its assets through a series of actions, including
litigation in the courts of Belgium; and
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filed
claims for indemnification under the U.S. insurance policies and
the U.K. insurance policies.
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In furtherance of the foregoing, the Company has
taken the following steps and the following events have
occurred.
Effective December 2009, the Company entered
into an interim payment agreement with the U.S. Underwriters
pursuant to which the Company received a non-refundable payment of
$28 million (the “Interim Payment”), and the U.S.
Underwriters agreed to reimburse certain costs incurred by the
Company in connection with the investigation of its claims. In
addition, the U.S. Underwriters agreed to provide the Company with
a coverage opinion regarding all claims made under the U.S.
insurance policies by May 3, 2010.
On April 30 and May 3, 2010, the U.K.
Underwriters and the U.S. Underwriters, respectively, notified the
Company that they were denying coverage of the Company’s
claims. The U.K. Underwriters further advised the Company that they
had initiated litigation in the courts of England for a declaratory
judgment confirming that the Company’s losses were not
covered under the U.K. insurance policies. The Company answered by
asserting various counter claims and asking that coverage for the
Company’s claimed losses be confirmed by the
court.
On May 17, 2010, the Company filed suit in the
Federal District Court of New York asserting claims for, among
other things, the non-payment of covered losses under the U.S.
insurance policies, unpaid sue and labor costs and consequential
damages.
On July 1, 2011, the Company entered into the
Release and Settlement Agreements, as described above, pursuant to
which, among other things, the Company will be paid an additional
$32 million and, together with the Interim Payment, an aggregate of
$60 million.
Settlement
With Certain Financial Institutions
On October 26, 2010, the Company and its
affiliates, Lazare Kaplan Japan Inc. (“LK Japan”),
Lazare Kaplan Europe Inc. (“LK Europe”) and Lazare
Kaplan Africa Inc. (“LK Africa” and, collectively with
LK Japan and LK Euro
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