Rugged communications networking solutions designer RuggedCom Inc. has announced that its Board of Directors has adopted a limited duration shareholder rights plan. The Rights Plan will expire at the close of business on June 23, 2012.
The Rights Plan is intended to ensure that in the context of the unsolicited take-over proposal for RuggedCom common shares announced by Belden Inc., the Board has sufficient time to explore and develop strategic alternatives that are in RuggedCom’s best interests. The Rights Plan also seeks to ensure the fair treatment of shareholders and to provide them with adequate time to properly assess any potential take-over bid without undue pressure.
The Board has authorized the issuance of one right in respect of each common share of the Company outstanding at the close of business on December 23, 2011 and each share issued thereafter. The rights will become exercisable if a person, together with its affiliates, associates and joint actors, acquires or announces an intention to acquire beneficial ownership of common shares which, when aggregated with its current holdings, total 20% or more of the outstanding common shares of the Company (determined in the manner set out in the Rights Plan). Following the acquisition of 20% or more of the outstanding common shares, 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 common shares at a substantial discount to the market price of the common shares at that time.
The Board has the discretion to defer the time at which the rights become exercisable to a later date determined by the Board (which it has done in respect of the Belden offer) and to waive the application of the Rights Plan or redeem the rights if the Board determines it is in the best interests of RuggedCom to do so.
The Rights Plan permits the acquisition of control of RuggedCom through a “permitted bid”, a “competing permitted bid” or a negotiated transaction. A permitted bid is one that, among other things, is made to all holders of common shares for all of their shares, is open for a minimum of 75 days and is subject to an irrevocable minimum tender condition of at least 50% of the common shares held by independent shareholders.
Although the Rights Plan is effective immediately, it remains subject to acceptance by the Toronto Stock Exchange. A copy of the Rights Plan will be available at Sedar.