Kirkland Lake Gold Inc. today announced that its board of directors has approved the adoption of a shareholder rights plan in the normal course as part of its previously announced ongoing strategic review and short-term mine optimization plan.
The Special Committee of the Board is continuing, with the assistance of National Bank Financial, to carefully evaluate all options available to the Company from continuing on a stand-alone basis up to and including a potential sale of the Company's shares or assets. In parallel, the Company's new Chief Executive Officer, George Ogilvie, has been implementing the short-term mine optimization plan that is expected to drive improved returns and value creation. As announced on December 20, 2013, Mr. Ogilvie has implemented a number of changes to the Company, including a hiring freeze, reduced capital and operating expenditures, shut down of lower-grade slopes, and reductions in discretionary spending.
The Rights Plan will help ensure that the board and management is well positioned to complete the strategic and mine-plan reviews, by reducing the likelihood of any person or group gaining or increasing their control of Kirkland at this time.
The Rights Plan was not adopted in response to a takeover bid or other proposal to acquire control of the Company.
Once adopted, in accordance with the terms of the Rights Plan, one right will be issued in respect of each common share of the Company outstanding and each common share issued thereafter. The rights will become exercisable following any transaction in which a person, together with its affiliates, associates and joint actors, acquires beneficial ownership of common shares of Kirkland which, when aggregated with its holdings and the holdings of its affiliates, associates and joint actors, total 15% or more of the outstanding common shares of the Company (determined in the manner set out in the Rights Plan). Following the acquisition of 15% or more of the Company's 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. Rights held by a person, together with its affiliates, associates and joint actors whose actions trigger the Rights Plan would become void and not be exercisable. The Board has the discretion to defer the time at which the rights become exercisable and to waive the application of the Rights Plan.
The Board considers a 15% triggering threshold to be appropriate in the circumstances and is intended to ensure stability and protect the interests of all shareholders while the Company completes its strategic review process.
