Rockwell’s shareholder rights plan

Rockwell Diamonds Inc. announced today that its Board of Directors has approved the adoption of a Shareholder Rights Plan Agreement (the “Rights Plan”).

The Rights Plan has been adopted to ensure the fair treatment of all Rockwell shareholders in the eventuality of a possible take-over bid for the outstanding common shares of Rockwell. In the event that a takeover bid should occur the Rights Plan provides a mechanism to ensure that shareholders have adequate time to properly evaluate and assess a take-over bid without facing undue pressure or coercion. The Rights Plan also provides the Board with additional time to consider any take-over bid and, if applicable, to explore alternative transactions in order to maximize shareholder value. As such, the Rights Plan is not designed to prevent take-over bids that treat Rockwell shareholders fairly.

Pursuant to the terms of the Rights Plan, any bid that meets certain criteria intended to protect the interests of all shareholders are deemed to be “Permitted Bids”. A Permitted Bid must be made by way of a take-over bid circular prepared in compliance with applicable securities laws and, in addition to certain other conditions, must remain open for 60 days. In the event a take-over bid does not meet the Permitted Bid requirements of the Rights Plan, the rights issued under the plan will entitle shareholders, other than any shareholder or shareholders involved in the take-over bid, to purchase additional common shares of Rockwell at a significant discount to the market price of the common shares at that time.

Rockwell President and CEO, John Bristow commented, this Rights Plan is simply a proactive measure that we believe is appropriate to adopt in light of the increased pace of merger and acquisition activity in the mining industry. We feel this is the prudent thing to do to protect shareholder value while we are embarking on the current growth phase of the Company.

The Rights Plan will be presented for ratification by the shareholders at Rockwell’s 2008 annual meeting. If ratified by shareholders, the Rights Plan will have a term of three years.

Story link: Rockwell’s shareholder rights plan