1

Court File No.: CV-11-9532-00CL

ONTARIO SUPERIOR COURT OF JUSTICE

(COMMERCIAL LIST)

IN THE MATTER OF THE COMPANIES’ CREDITORS ARRANGEMENT ACT, R.S.C. 1985, c. C-36, AS AMENDED

AND IN THE MATTER OF A PLAN OF COMPROMISE OR

ARRANGEMENT OF CRYSTALLEX INTERNATIONAL CORPORATION

TWENTY-FIFTH REPORT OF THE MONITOR

April 25, 2018

INTRODUCTION

1. This Court granted Crystallex International Corporation (“Crystallex” or the “Applicant”)

protection under the Companies’ Creditors Arrangement Act (Canada) (the “CCAA”)

pursuant to the Initial Order of Mr. Justice Newbould dated December 23, 2011 (the

“Initial Order”). The Initial Order appointed Ernst & Young Inc. as the monitor (the

“Monitor”) of the Applicant and granted a stay of proceedings, which was most recently

extended to April 30, 2018 pursuant to an order of this Court dated February 27, 2018.

2. On the same date as the Initial Order, Crystallex also commenced a proceeding before the

United States Bankruptcy Court in the District of Delaware (the “Delaware Bankruptcy

Court”) pursuant to Chapter 15 of the United States Bankruptcy Code to obtain an order

recognizing these CCAA proceedings as the main proceedings and providing a stay of

proceedings in the United States (the “Chapter 15 Proceedings”). On January 20, 2012,

the Delaware Bankruptcy Court granted an order approving the recognition of the CCAA

proceedings as a foreign main proceeding and giving full force and effect in the United

States to the Initial Order, including any extensions or amendments authorized under the

CCAA proceedings.

3. In order to provide the necessary financing for its CCAA proceeding and to pursue its claim

2

(the “Arbitration Claim”) against the Bolivarian Republic of Venezuela (“Venezuela”)

in relation to certain mine sites that it alleged were expropriated, Crystallex obtained

debtor-in-possession financing (“CCAA Financing”) from Luxembourg Investment

Company 31 S.à.r.l. (successor to Tenor Kry Coöperatief U.A.) (the “DIP Lender”). This

Court granted an Order approving the CCAA Financing (“CCAA Financing Order”)

dated April 16, 2012. The current outstanding principal owed to the DIP Lender is US

$75,733,333.

4. On April 4, 2016, an arbitral tribunal constituted under the auspices of the Additional

Facility of the International Center for Settlement of Investment Disputes (“ICSID”)

granted an award (the “Award”) in favour of the Applicant (the “Final Award Order”).

The Award against Venezuela includes:

a) USD $1.202 billion in damages;

b) interest accrued at 6-month average U.S. dollar LIBOR plus 1%, compounded

annually, from April 13, 2008 to the date of the Final Award Order; and

c) post judgment interest from the date of the Final Award Order.

PURPOSE

5. The Monitor is filing this twenty-fifth Report (the “Twenty-Fifth Report”) to provide the

Court with an update on:

a) the status of payments under the Settlement Agreement (defined below) and the Ingalls

Settlement Agreement (defined below);

b) the status of the bridge debtor-in-possession loan agreement (the “Bridge DIP Loan

Agreement”);

c) the distribution mechanics and the status of the Applicant’s outstanding professional

fees;

d) the status of the Shareholder Motion (defined below) and the Threshold Motion

(defined below);

e) the Applicant’s request for approval of the ninth amendment to the debtor-in-possession

agreement (the “Ninth Credit Amendment Agreement”);

f) the Applicant’s request for an extension of the Stay Period to March 29, 2019;

3

g) an update on the Applicant’s actual receipts and disbursements for the Period from

February 1, 2018 to March 31, 2018 (the “Reporting Period”);

h) the Applicant’s cash flow projection from April 1, 2018 to March 31, 2019 (the “Cash

Flow Projection”); and

i) the Monitor’s observations and recommendations.

DISCLAIMER

6. In preparing this Twenty-Fifth Report and making the comments herein, the Monitor has

been provided with, and has relied upon, unaudited financial information, books and

records prepared by Crystallex, and discussions with management of the Applicant

(“Management”) (collectively, the “Information”).

7. The Monitor has reviewed the Information for reasonableness, internal consistency and use

in the context in which it was provided. However, the Monitor has not audited or otherwise

attempted to verify the accuracy or completeness of the Information in a manner that would

wholly or partially comply with Generally Accepted Auditing Standards (“GAAS”)

pursuant to the Chartered Professional Accountants Canada Handbook and, accordingly,

the Monitor expresses no opinion or other form of assurance contemplated under GAAS in

respect of the Information.

8. Capitalized terms not defined in this Twenty-Fifth Report are as defined in previous reports

of the Monitor. Unless otherwise stated, all monetary amounts contained herein are

expressed in U.S. Dollars.

STATUS OF THE SETTLEMENT AGREEMENT AND THE INGALLS SETTLEMENT

9. The Applicant has been following a dual-track strategy with respect to collecting on the

Award, seeking recognition and enforcement of the Award while concurrently attempting

to pursue and negotiate a resolution of the award with Venezuela.

4

Status Update regarding the Settlement Agreement

10. As described in previous reports of the Monitor, the Applicant reached an agreement with

Venezuela to settle the Award as set out in the Contract of Transaction and Settlement (the

“Settlement Agreement”). This Court granted an Order approving the Settlement

Agreement (the “Settlement Approval Order”).

11. The Settlement Agreement provides that the settlement amount will be paid in a series of

instalments over the term of the Agreement (the “Venezuela Payments”). If Venezuela

breaches any of its payment obligations under the Settlement Agreement, Crystallex will

be entitled to recommence all of its enforcement activities on the Award, as well as pursue

and initiate new enforcement and collection efforts.

12. As set out in the affidavit sworn by Robert Fung on April 23, 2018 (the “Fung Affidavit”),

Crystallex has received Venezuela Payments of approximately US $25 million. The

Monitor understands that those funds are held in its Canadian account and an account that

the Applicant has access to. The Applicant expects that Venezuela will initiate additional

transfers under the Settlement Agreement.

Status Update regarding the Ingalls Settlement

13. As described in the amended twenty-first report of the Monitor dated November 15, 2017

(the “Twenty-First Report”), the Applicant entered into a Settlement Agreement with

Ingalls to fully and finally resolve all differences and claims related to funds held in an

account at Bank of New York Mellon (the “Ingalls Settlement Agreement”). The major

terms and conditions of the Ingalls Settlement Agreement are summarized in the

unredacted Twenty-First Report.

14. The Monitor understands that, on April 10, 2018, Crystallex’s lead U.S. litigation counsel

received approximately $43.2 million as a result of the Ingalls Settlement Agreement.

Pursuant to the terms of the Ingalls Settlement Agreement, amounts were disbursed to

Ingalls and a number of other entities, including Venezuela’s counsel. As a result, the

Applicant will recover in excess of $19 million from the funds received pursuant to the

Ingalls Settlement.

5

BRIDGE FINANCING

15. As described in previous reports of the Monitor, Crystallex’s lead U.S. litigation counsel

required that its outstanding fees and expenses (the “Litigation Fees”) be paid prior to the

Alter Ego Motion. As a result, Crystallex entered into a loan agreement (the “Bridge DIP

Loan Agreement”) with Meryl Investments, LLC (“Meryl”), which provided a bridge DIP

facility of US $6.2 million and a commitment fee of US $0.2 million and interest rate at

10% per annum compounded monthly (the “Bridge DIP Loan”). On December 20, 2017,

this Court granted an order approving the Bridge DIP Loan Agreement and a charge over

Crystallex’s property or security for the Bridge DIP Loan in priority to the obligations

under the DIP Credit Agreement (the “Bridge DIP Lender’s Charge”).

16. By order of this Court dated February 27, 2018, the Bridge DIP Loan maturity was

extended to April 30, 2018 or such earlier date if there was an event of default as defined

in the Bridge DIP Loan Agreement (the “Bridge DIP Loan Amendment Agreement”)

17. The Applicant has repaid the Bridge DIP Loan, together with interest, fees and costs for a

total amount of approximately $7 million and the Applicant is requesting a discharge of the

Bridge DIP Lender’s Charge.

PROFESSIONAL FEES AND TAXES

Mechanics of Distribution

18. As set out in the Fung Affidavit, each Venezuela Payment received under the Settlement

Agreement is to be applied by the Applicant in accordance with the terms of the DIP Credit

Agreement. In summary, the Applicant shall:

a) First, pay the then accrued and unpaid post filing expenses (as incurred in accordance

with the budget);

b) Second, pay any taxes, payable or required to be withheld by the Borrower or by any

government in respect of the settlement, judgment or collection in relation to the

Arbitration Proceeding, as determined at such time by an independent international

accounting firm acceptable to the Borrower and the Lender; and

7

period as described in the cash flow projection. The outstanding post-filing expenses do

not include amounts for fees incurred which have yet to be billed.

23. To date, the amount of taxes payable or required to be withheld by the Applicant with

respect to the Arbitration proceeds has not been determined. The Company has advised

the Monitor that it has retained KPMG in accordance with the terms of the DIP Credit

Agreement to assess and determine the taxes that may be owing.

24. Any disbursements made by the Applicant during the Stay Period will have to comply with

the terms of the DIP Credit Agreement. As such, the Monitor will provide quarterly

updates to the Court and the Service List during the Stay Period, including updates on any

disbursements made by the Applicant.

MOTIONS BROUGHT BY THE EQUITY COMMITTEE AND THE DIP LENDER

25. As described in the previous reports, Gowling WLG (Canada) LLP, as counsel to nine of

the Applicant’s shareholders (the “Equity Committee”), brought a motion (the

“Shareholder Motion”) seeking an order (i) lifting the Stay to allow the Equity Committee

to commence a claim alleging oppression and a breach of the criminal interest rate

provisions in the Canadian Criminal Code; and (ii) varying a number of DIP approval

orders and an order approving the Net Arbitration Proceeds Transfer Agreement.

26. In January 2018, counsel to the DIP Lender advised counsel to the Equity Committee that

the DIP Lender intended to bring a motion to determine whether the Shareholder Motion

advances allegations which, if proved, meet the threshold test to vary final CCAA orders

approved by this Court (the “Threshold Motion”).

27. On January 30, 2018, this Court ordered that the Threshold Motion would be heard first on

March 28, 2018. If the Threshold Motion is unsuccessful, the parties have agreed that a

three to five day hearing of the Shareholder Motion will be heard in the Fall of 2018.

28. The Threshold Motion was heard on March 28, 2018 and a decision is currently under

reserve.

10

Management for the Probable and Hypothetical Assumptions and the preparation and

presentation of the Cash Flow Statement.

39. Based on this review, nothing has come to the Monitor’s attention that causes it to believe,

in all material respects, that:

a) the Probable and Hypothetical Assumptions are inconsistent with the purpose of the

Cash Flow Statement;

b) as at the date of this Report, the Probable and Hypothetical Assumptions are not

suitably supported and consistent with the plans of the Applicant or do not provide a

reasonable basis for the Cash Flow Statement, given the Probable and Hypothetical

Assumptions; or

c) the Cash Flow Statement does not reflect the Probable and Hypothetical Assumptions.

40. The Monitor notes that the Cash Flow Statement contains a line item titled “Reserve for

Liabilities”, which it understands is a placeholder description because any tax liabilities

have not yet been assessed and remain unpaid. If any funds are to be placed in the Principal

Cash Collateral Account before the taxes are assessed and paid, an agreement, acceptable

to the Applicant, the Lender and the Monitor, will have to be concluded.

41. The Cash Flow Statement has been prepared solely for the purpose described above, and

readers are cautioned that it may not be appropriate for other purposes.

THE MONITOR’S OBSERVATIONS AND RECOMMENDATIONS

42. A key objective of the Applicant in the CCAA proceeding was and remains having

sufficient funding to allow it to continue the pursuit and collection of the Award for the

benefit of all of its stakeholders. The Monitor is of the view that the Applicant has made

significant progress and is continuing to pursue this objective in good faith and with due

diligence.

43. Given the Venezuela Payments received to date, Management’s expectation that additional

Venezuela Payments will be wired by Venezuela in the subsequent period is reasonable.

11

44. Therefore, subject to the resolution of the matter noted in paragraph 40 above, the Monitor

supports the Applicant’s request for approval of the Ninth Amendment Agreement, which

will extend the maturity of the obligations under the DIP Agreement (with a waiver by the

DIP Lender of any extension or amendment fees).

45. With Management’s expectation that additional Venezuela Payments will be received

during the forecast period, the Cash Flow Forecast indicates that the Applicant is estimated

to have sufficient liquidity through March 29, 2019. Therefore, the Monitor is supportive

of the Applicant’s motion for an extension to March 29, 2019.

46. The Monitor also supports the Applicant’s request for the sealing of the Cash Flow

Projection and making only the redacted version of this Twenty-Fifth Report available to

parties who have not signed a confidentiality agreement.

All of which is respectfully submitted this 25th of April, 2018.

ERNST & YOUNG INC. In its capacity as Court-appointed Monitor of Crystallex International Corporation Per:

Brian M. Denega Senior Vice President

12

Confidential Appendix A

13

Confidential Appendix B