VANCOUVER, Oct. 16 /CNW/ - Pala Investments Holdings Limited ("Pala")
today announced that Rockwell Diamonds Inc.'s ("Rockwell") (TSX: RDI; JSE:
RDI; OTCBB: RDIAF) claim that Pala's premium all-cash offer (the "Offer") is
not in compliance with South African securities legislation is an attempt to
distract shareholders from continued value destruction at Rockwell.
Pala's Offer complies with South African securities law
"Rockwell's announcement is simply inaccurate and misleading. Rockwell
either fails to understand the regulatory process or is intentionally
circulating inaccurate information. It could be both, given management's poor
record in understanding the approval process for the acquisition of
Saxendrift, and the selective disclosure policies we have seen from Rockwell,"
said Jan Castro, Managing Director of Pala Investments AG, advisor to Pala.
Pala maintains that its Offer is in full compliance with South African
securities law, and has been advised by South African legal counsel that there
is no reason to believe that all regulatory approvals required under South
African law to complete the Offer will not be forthcoming. In particular,
South African counsel has advised that the South African Securities Regulation
Code on Takeovers and Mergers has no application to the Offer, and that under
South African law the Offer must be regulated under the applicable Canadian
laws. For this reason Pala has questioned the power of the South African
Securities Regulation Panel (the "SRP") to make any rulings at all on the
Offer; and this issue is still before the SRP because it is being contested in
an appeal process.
Rockwell attempts to divert attention from poor results
"Rockwell's decision to make an announcement about an unfinished SRP
review would be puzzling, if it did not coincide with the release of yet
another poor quarter's results," said Mr. Castro. "This is a transparent
attempt to distract shareholders from the continued underperformance of the
Rockwell's second quarter results show continued operating cost
escalation and further declines in the average diamond prices achieved.
Average operating costs were an incredible US$4.65/tonne, 57% higher than the
corresponding period in 2007, while average diamond prices fell by 26% fall
(excluding Saxendrift costs and revenues). Rather than focusing on these poor
results and providing clear explanations of why they have occurred, Rockwell's
results announcement instead focuses on one large stone, which was not even
recovered in the quarter in question.
"It is clear from the latest set of results that Rockwell's management
has lost control of the operations. Given the recent deterioration in diamond
prices worldwide, it is becoming even more important that diamond mining
companies control their costs, and have an efficient, transparent sales
process. Rockwell has not achieved either of these aims, leaving the
operations with a highly uncertain future under the current management team,"
said Mr. Castro.
Continued management entrenchment
"Rockwell's focus on legalistic defence tactics to block the Offer is
symptomatic of Rockwell's complete disregard for shareholder value. By
attempting to frustrate the Offer through legal manoeuvres, instead of
demonstrating how management can create value, Rockwell is trying to deprive
its shareholders of the opportunity to achieve liquidity through a premium
all-cash Offer," said Mr. Castro. "This is simply another stalling tactic from
management that only highlights their continued entrenchment and refusal to
address the real issues facing the business."
About the Offer
Pala, through a wholly-owned subsidiary, on September 9, 2008 commenced
an Offer to acquire 100% of the common shares of Rockwell. Complete
information about the offer can be obtained by referring to the Offer and
take-over bid circular filed with Canadian securities regulators. The Offer
remains open for acceptance until 5:00 p.m. (Vancouver time) on November 10,
The Offer is being made for the securities of a Canadian issuer and the
offer is subject to Canadian disclosure requirements. Shareholders should be
aware that such disclosure requirements are different from those of the United
For information about the offer, or for assistance in tendering shares,
please contact Kingsdale Shareholder Services toll-free at 1-866-581-1479 or
collect at 1-416-867-2272.
Pala Investments Holdings Limited, based in Jersey, Channel Islands, is a
US$1.2 billion multi-strategy investment company with a particular focus on
mining and natural resource companies in both developed and emerging markets.
Pala Investments' exclusive investment advisor, Pala Investments AG, is a
Switzerland-based team with extensive experience within the mining and natural
resource sectors. Pala Investments seeks to assist companies in which they
have long-term shareholdings by providing strategic advice and innovative
Certain statements in the press release are forward-looking statements
and are prospective in nature. Forward-looking statements are not based on
historical facts, but rather on current expectations and projections about
future events, and are therefore subject to risks and uncertainties which
could cause actual results to differ materially from the future results
expressed or implied by the forward-looking statements. These statements
generally can be identified by the use of forward-looking words such as "may",
"should", "will", "could", "intend", "estimate", "plan", "anticipate",
"expect", "believe" or "continue", or the negative thereof or similar
variations. Such statements are qualified in their entirety by the inherent
risks and uncertainties surrounding future expectations. Important factors
that could cause actual results to differ materially from the expectations of
Pala include, among other things, general business and economic conditions
globally or in particular geographic regions in which Rockwell and its
subsidiaries conduct business, the failure to meet certain conditions of the
Offer, regulatory requirements, the inability to attract and retain qualified
employees, competition, regionally and internationally, changes in law,
disruptions in business operations due to reorganization activities, and
interest rate and foreign currency fluctuations. Such forward-looking
statements should therefore be construed in light of such factors, and Pala is
not under any obligation, and expressly disclaims any intention or obligation,
to update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise.
For further information:
For further information: Media: John Lute, Lute and Company, (416)
929-5883; Shareholders: Kingsdale Shareholder Services, toll-free:
1-866-581-1479, collect: (416) 867-2722