JOHANNESBURG (miningweekly.com) – The share price of the JSE- and TSX-listed Rockwell Diamonds leapt 17% on the JSE on Wednesday as three of its directors defended the company against what they described as a “completely unnecessary, cashless takeover” attempt by the Russian-linked Pala Investments.

Pala, which holds 19,9% of the shares of Rockwell and which was engaged in an unsuccessful hostile bid for the company last year, had earlier requisitioned a June 17 meeting of Rockwell shareholders to vote on the appointment of a new set of directors and to terminate the company's shareholder rights plan, which is put in place as a protection against hostile takeover attempts.

Essentially the plan gives management and the board additional time to consider the offer, and possibly come up with alternative transactions that could offer better value.

Pala also wants the meeting for shareholders to consider a proposal that Rockwell raise the funds it needs through a rights offering to all shareholders, to "avoid potential dilution", which may occur if the company opts to sell shares through a private placement.

Rockwell CEO John Bristow, chairperson David Copeland and director Mark Bristow on Wednesday described the Pala-requisitioned meeting as “completely unnecessary” in view of Rockwell’s planned July annual general meeting.

Copeland said that shareholders and management would now suffer the costs and distraction of two shareholders meetings in such quick succession.

"We see Pala's proposal to remove the executive directors and to terminate the shareholder rights plan as yet another attempt to control the company – this time, as a kind of cashless takeover,” Copeland said, adding that Rockwell management had been subjected to ongoing attacks by Pala, which was placing considerable strain on the company’s financial resources and management time.

Despite that distraction, management had proactively addressed the challenges of the global economic crisis, and had steadily enhanced operational activities.

Productivities had increased and operational costs had continued to decrease and diamond prices were also improving.

“The executive directors believe the worst is behind us,” Copeland said, adding that Pala appeared to be seeking a financing option that it would dominate.

“This is clearly a continuation of last year’s failed takeover attempt, only this time they are seeking to control the company without offering to pay shareholders any control premium at all,” Copeland added.

Included in Pala’s proposed new set of directors are former Kumba Iron Ore GM Matie von Wielligh as chairperson, Deloitte & Touche retiree Phillip Reynolds as interim CEO, former Rockwell COO Hennie van Wyk, and African Vanguard’s Sandile Zungu.

Pala Investments Holdings Limited, based in Jersey, Channel Islands, describes itself as a multistrategy investment company with a particular focus on mining and natural resource companies in both developed and emerging markets.

“You have to ask yourself why Pala withdrew its last bid. Now it looks as though it’s trying to sneak in the back door,” Bristow remarked to Mining Weekly Online, putting the sudden rise in Rockwell JSE share price down to a possible attempt by punters at arbitrage.

Diamond junior Rockwell, which focuses on high-quality gemstone diamonds from alluvial deposits, has four alluvial diamond-mining operations and a pipeline of brownfields projects. It achieved an average price of $2 000/ct for its diamond sales in fiscal 2008.

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