Neo's Board Denies Shareholders Right to Decide for Themselves

    TORONTO, Feb. 17 /CNW/ - Pala Investments Holdings Limited ("Pala") today
commented on the board of Neo Material Technologies Inc.'s ("Neo"; TSX: NEM)
hasty reaction to Pala's announcement that it intends to acquire up to 23
million shares through a premium partial offer. Neo's board appears intent on
denying shareholders the right to choose for themselves whether to take
advantage of Pala's offer. Only three days after Pala's announcement, Neo's
board implemented a second shareholder rights plan (the "Second Plan")
forbidding partial bids.
    In imposing the Second Plan, Neo's board completely disadvantages
shareholders desiring liquidity. Pala's offer is intended to provide those
shareholders desiring immediate liquidity with an opportunity for a premium of
27% over the closing price of Neo's shares on the last trading prior to the
announcement. Neo's board is also depriving shareholders who wish to remain
invested the benefits of having Pala as a cornerstone shareholder. Moreover,
by banning partial bids, Neo's board has not only denied shareholders their
right to decide for themselves, but has also created a significant overhang in
the stock with all of the associated risks. Based on this, Pala fails to see
how Neo's board is acting in the best interests of the company or its
    "The oppressive behaviour of Neo's board, without even an attempt to
speak with Pala, exhibits its unwillingness to consider a premium opportunity
for shareholders seeking liquidity. This is particularly punitive for
shareholders as it deprives them of their right to sell their shares during a
severe economic downturn particularly affecting Neo's end-customers in the
automotive and consumer electronics sectors, with no signs of recovery in
2009," said Jan Castro, Managing Director, Pala Investments AG, advisor to
Pala. "Pala believes shareholders are more than capable of determining whether
they wish to hold Neo shares for the long-term or seek liquidity now, and that
it is inappropriate for Neo's board to strip them of this right."
    Shareholders should be the ultimate decision-makers when it comes to
their own investments, as is clearly laid out in widely-accepted corporate
governance guidelines. For example, Risk-Metrics Group, formerly Institutional
Shareholder Services, an industry leader in shareholder advisory services,
states in its 2008 Canadian Proxy Voting Guidelines, "ISS guidelines provide
that an acceptable Permitted Bid definition must permit partial bids. Canadian
takeover bid legislation is premised on the ability of shareholders to make
the determination of the acceptability of any bid for their shares, partial or
    RiskMetrics further recommends that shareholders vote against any
shareholder rights plan that "prevents a bid from going to shareholders" or
"does not permit partial bids."
    Moreover, by issuing the Second Plan rather than amending the existing
plan, Neo's Board has circumvented the Toronto Stock Exchange requirement that
amendments to shareholder rights plans cannot be made "without the prior
written consent of the TSX," as stated in Section 637 of the TSX Company
Manual. In fact, the existence of two concurrent shareholder rights plans for
a single company is virtually unprecedented for a TSX-listed company.
    As a matter of good corporate governance, Pala can only assume that Neo's
board will reconsider the impact of its actions on shareholder's rights. The
speed of the plan's implementation, after only preliminary consideration by
the board, reveals the lack of appropriate diligence surrounding the plan and
the implications for the company.
    Pala intends to file its offering circular promptly after receiving Neo's
shareholders list, which is due from the company no later than Thursday,
February 19, 2009.
    Pala has retained CIBC World Markets and Goodmans LLP as advisors on this
matter and continues to review its strategic alternatives.

    About Pala

    Pala Investments Holdings Limited, based in Jersey, Channel Islands, is a
US$1.0 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 it has
long-term shareholdings by providing strategic advice and innovative financing

    This press release contains summary information only about the offer by
Pala. Complete information about the offer will be available by referring to
the offer and takeover bid circular to be filed with Canadian securities

    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 Neo and its subsidiaries
conduct business, the failure to meet certain conditions of the offer, 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
    Information concerning Neo contained in this press release and has been
taken from, or is based upon, publicly available information and records on
file with Canadian securities regulatory authorities and other public sources.
Neo has not reviewed this press release and has not confirmed the accuracy and
completeness of the information in respect of Neo contained herein. Although
Pala has no knowledge that would indicate that any statements contained herein
concerning Neo taken from or based on such documents and records are untrue or
incomplete, neither Pala, nor any of its affiliates, nor any of their
respective directors or officers, assumes any responsibility for the accuracy
or completeness of such information or for any failure of Neo or its directors
or officers to disclose events or facts which may have occurred or which may
affect the significance or accuracy of any such information but which are
unknown to it.
    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 further information:

For further information: Colin Murray, Pala Investments AG,
+41-41-560-9070; Shane Dolgin, Edelman Public Relations for Pala, (416)
979-1120; Shareholders: Kingsdale Shareholder Services, 1-866-581-0512

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