http://www.miningmx.com/diamonds/roc...

Rockwell faces new Pala attack
Brendan Ryan
Posted: Thu, 30 Apr 2009

[miningmx.com] -- SWISS-based Pala Investment Holdings (Pala) has launched a bid to remove all the directors of Rockwell Diamonds, the JSE- and TSX-listed diamond producer it failed to take over through a hostile bid in 2008.

Pala holds 19.9% of Rockwell. It announced on Wednesday that it had called a special and general shareholders’ meeting to be held on June 17 in Vancouver.

At that meeting shareholders will be asked to remove all Rockwell directors and elect a new board, as well as “amend and then terminate the company’s shareholder rights plan agreement”.

A Pala statement said this action follows Rockwell’s failure to call a shareholder meeting to remove the directors, which Pala had requisitioned on March 23.

Rockwell runs four alluvial diamond mining operations along the middle Orange River.

Click Here to subscribe to our daily newsletter

In September 2008 Pala launched a hostile takeover bid which was rejected by the Rockwell board for a string of reasons.

These included that the offer did not comply with South African securities laws and that “there is substantial uncertainty with respect to Pala’s intentions”.

A statement by the Rockwell board rejecting the offer released in September said: “Pala is a financial investor with no experience in running a diamond company operating in South Africa. The board believes that the offer is designed to create value for Pala rather than the company’s other shareholders.”

Pala withdrew the bid in November.

Rockwell CEO John Bristow said on Thursday: “Since Pala dropped the bid, there has been no let-up from them on us. This has been destructive for the company because management has been unable to focus on running the business.

“We cannot go on like this. Hopefully at the meeting we can turn the situation around on them. They were not able to get the necessary support last year from other shareholders to take over Rockwell.”

Bristow added that Pala’s actions had resulted in a number of key staff leaving Rockwell.

“These were good people capable of getting jobs elsewhere, and they left because of the uncertainty created by Pala.

“Pala is a typical private equity fund run by people who sit in offices but have no practical experience. They have no understanding of South African issues such as black economic empowerment requirements.

“They also have no management team to offer which will come in and run the operations if they take over.”

During the past year Pala has built up a 44% stake another Canadian junior miner - Coalcorp Mining - and two Pala executives were appointed to the Coalcorp board in November.

Pala has also launched a partial offer for TSX-listed mining company Neo Materials, whose directors are fighting off that bid.