Neo Material Technologies adopts new shareholder rights plan



    TORONTO, Feb. 12 /CNW/ - As previously announced by press release dated
February 9, 2009, Neo Material Technologies Inc. (TSX: NEM) (the "Company" or
"Neo") has been notified by Pala Investments Holdings Limited ("Pala") that
Pala intends to make a partial offer (the "Pala Partial Offer") to acquire up
to an additional 23 million outstanding common shares of the Company. The Pala
Partial Offer would represent an acquisition of an additional 20% of the
common shares of Neo and, based on the Company's information, if completed,
would bring Pala's aggregate ownership interest to approximately 40% of the
outstanding common shares of Neo.
    A special committee of the Board of Directors of the Company, comprised
entirely of independent directors, has been formed to consider and evaluate
the Pala Partial Offer and matters related thereto. The Company has retained
GMP Securities L.P. as the exclusive financial advisor to the Board of
Directors and the Special Committee in connection with the provision of
strategic advice related to the Pala Partial Offer and similar transactions.
Stikeman Elliott LLP has been retained by the Special Committee as legal
advisor. Fogler, Rubinoff LLP is the Company's legal advisor.
    After preliminary consultation with financial and legal advisors, James
Jackson, Chairman of the Company, stated: "We believe that Pala's proposed
offer significantly undervalues our Company. It ignores the Company's
long-term earnings potential and ability to generate free cash flow, and is
unfairly opportunistic by attempting to capitalize on the weak global economic
climate and depressed stock market conditions, while simultaneously ignoring
intrinsic value. In addition, it is a coercive attempt to acquire control of
the Company without providing our shareholders with the control premium and
liquidity that such an acquisition would normally require."
    The Board of Directors has today approved the adoption of a new
shareholder rights plan (the "New Plan"). The New Plan, adopted in direct
response to the Pala Partial Offer, is applicable to similar unfair attempts
to make creeping takeovers of the Company and is in addition to the Company's
existing shareholder rights plan dated February 5, 2004 (the "Rights Plan").
The existing Rights Plan was most recently approved in April, 2007 by Neo
shareholders and will remain in effect. The New Plan is substantially similar
to the existing Rights Plan, except that it requires that any take-over offer
be made to all Neo shareholders for all of their shares. A full copy of the
New Plan will be available on SEDAR at www.sedar.com.
    The purpose of the New Plan is to provide the Board the ability to
prevent the acquisition of control of, or a creeping takeover bid for, the
Company by means of a partial bid. The New Plan requires that any offer to
acquire shares of the Company be made to all shareholders for all of their
shares to ensure that all shareholders of the Company are treated equally and
fairly in connection with any take-over bid for the Company. The New Plan is
being adopted to discourage discriminatory, coercive or unfair attempts to
take over the Company.
    Under the New Plan, rights will be issued and attached to all Neo common
shares. A separate rights certificate will not be issued until such time as
the rights become exercisable (which is referred to as the "separation time").
Subject to the right of the Board of Directors to defer the separation time,
the rights will become exercisable only if a person, together with its
affiliates, associates or joint actors, acquires or announces its intention to
acquire beneficial ownership of shares which when aggregated with its current
holdings total 20% or more of the outstanding Neo common shares (determined in
the manner set out in the New Plan). The Board of Directors has deferred the
separation time that would otherwise have occurred as a consequence of the
Pala Partial Offer until a date to be determined by the Board of Directors.
Following an acquisition of shares prohibited by the New Plan, each right held
by a person other than the acquiring person and its affiliates, associates and
joint actors would, upon exercise, entitle the holder to purchase Neo common
shares at a substantial discount to their then prevailing market price.
    The issuance of the rights is not dilutive and will not affect reported
earnings or funds from operations per share until the rights separate from the
underlying Neo common shares and become exercisable or until the exercise of
the rights. The issuance of the rights will not change the manner in which
shareholders currently trade their common shares.
    The New Plan will take effect immediately, is subject to approval of the
Toronto Stock Exchange and will be subject to confirmation by the Company's
shareholders at its next shareholder meeting, which is currently scheduled to
take place on April 24, 2009.

    About Neo Material Technologies

    Neo Material Technologies is a producer, processor and developer of
neodymium-iron-boron magnetic powders, rare earths and zirconium based
engineered materials and applications through its Magnequench and AMR
Performance Materials business divisions. These innovative products are
essential in many of today's high technology products. Magnequench's neo
powders are used to produce bonded magnets, generally used in micro motors,
precision motors, sensors and other applications requiring high levels of
magnetic strength, flexibility, small size and reduced weight. Rare earth and
zirconium applications include catalytic converters, computers, television
display panels, optical lenses, mobile phones and electronic chips. The
Company is headquartered in Toronto, Canada and has approximately 1,300
employees in 15 locations, across 10 countries.

    %SEDAR: 00002061E




For further information:

For further information: Michael Doolan, Chief Financial Officer, (416)
367-8588, ext. 335, Website: www.neomaterials.com, e-mail:
info@neomaterials.com; Ali Mahdavi, Investor Relations, (416) 962-3300, ext.
225, e-mail: amahdavi@neomaterials.com

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