Pala Amends Offer for Rockwell - Drops Due Diligence Condition

    VANCOUVER, Sept. 25 /CNW/ - Pala Investments Holdings Limited ("Pala")
today announced that it is amending its premium all-cash offer (the "Offer")
made on September 9, 2008 to holders of the common shares of Rockwell Diamonds
Inc. ("Rockwell") (TSX: RDI; JSE: RDI; OTCBB: RDIAF).

    Amended Offer

    Pala today amended its Offer by waiving the due diligence condition which
required that Pala be granted reasonable access to information concerning
Rockwell, including access to its management, by September 24, 2008. The
removal of this condition provides shareholders with greater value certainty
and means Pala will continue with its Offer on the original timeline. The
remaining conditions of the Offer are standard and customary for a take-over
bid of this nature.
    "Pala's cash offer of $0.36 per share represents an exceptional 85%
premium to the pre-bid share price, and provides shareholders with a clear
liquidity event," said Jan Castro, Managing Director of Pala Investments AG,
advisor to Pala.

    Rockwell's plan offers no viable alternative

    Rockwell's Directors' Circular of September 19, 2008 recommends that
shareholders do not tender to the Pala Offer, but provides no indication of a
viable alternative or how shareholders will realize value for their

    -   No new ideas for value creation. The proposed plan presented by
        Rockwell is vague and lacks detail, preventing shareholders from
        judging its viability. The plan is not new, but is the same
        production plan previously presented in April 2007 that failed due to
        poor operational performance.

    -   Failure to address fundamental operational issues. Rockwell's plan
        provides no solution for ongoing problems, including:

        -  Significant production shortfalls;

        -  Rapidly rising costs;

        -  Failure to deal with operational challenges; and

        -  Management's serious conflict of interest as owners of Flawless
           Diamond Trading House.

    -   Management's inability to deliver. Having failed to deliver the same
        plan in the past, management's ability to deliver on its promises is
        highly questionable.

    -   Critical liquidity issues. In challenging financial markets, any
        further operational problems are likely to result in future cash flow
        and funding issues for Rockwell.

    Continuing with the same failed management team and the same failed
strategy presents significant risks for shareholders of not accepting Pala's
    "Rockwell's reasons for its recommendation are either weak or
non-existent. Management has presented no new plan to create value for
shareholders but is relying on the failed approach of previous years. Simply
promising shareholders that by 2010 it will reach the production levels it
once promised for 2008 is not a compelling argument for value-creation," said
Mr. Castro. "Rockwell has not offered any solutions for the underlying
problems of the business. This makes Rockwell's assertion that Pala's premium
all-cash Offer undervalues the business deeply flawed," continued Mr. Castro.
"Hoping for the best is not a business plan and leaves shareholders with
significant risk and an uncertain future. Pala's Offer provides all Rockwell
shareholders with the opportunity to choose cash and certainty rather than
continued value destruction."

    Continued management entrenchment

    The strategic review process described in Rockwell's Directors' Circular
is aimed primarily at further entrenching management's position, rather than
finding valid value-maximizing alternatives for shareholders.
    Rockwell disclosed that, as of September 19, 2008, it had prepared a form
of confidentiality agreement, and that it has "initiated conversations" with
third parties who have "expressed an interest". However, it's been nearly a
month since Pala proposed a price of $0.40 per share and no competing offers
have been made and no confidentiality agreements have been signed.
    "By refusing to engage with Pala or to advance its strategic review
process with any meaningful commitment, Rockwell has again demonstrated that
management's primary interest is in preserving its own position rather than
acting in the best interest of all shareholders," stated Mr. Castro.
"Rockwell's refusal to allow Pala due diligence access is yet further evidence
of management's entrenched position, and represents another opportunity where
further value could have been provided to shareholders."
    Management's true motivation was highlighted by the new disclosure in the
Directors' Circular of one-year change-of-control payments which appear to be
newly included in the employment agreements of President and CEO John Bristow
and CFO Dominique de la Roche. These generous change-of-control provisions
were not disclosed in the circular mailed for Rockwell's September 15, 2008
annual general meeting.
    Shareholders are currently left with a clear choice between the Pala
Offer and a management-run process that after nearly a month has not
identified any alternatives.

    Regulatory compliance

    Pala approached South African regulators prior to making the Offer on
September 9, 2008, and has made the Offer in compliance with South African
securities laws and the South African Securities Regulation Code on Takeovers
and Mergers and the Rules of the Securities Regulation Panel, where
applicable. South African counsel has also informed Pala that they have no
reason to believe that all regulatory approvals required to complete the Offer
will not be forthcoming.

    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,
    Prior to amendment, the Offer contained a due diligence condition which
required that Rockwell grant Pala reasonable access to information concerning
Rockwell, including access to its management, by September 24, 2008.
    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
financing solutions.

    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, 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

Organization Profile

Pala Investments Holdings Limited

More on this organization

Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890