Avalon Advanced Materials Announces Adoption of Shareholder Rights Plan
Toronto, Ontario – In a recent press release, Avalon Advanced Materials Inc. (TSX: AVL) (OTCQB: AVLNF) (“Avalon” or the “Company”) announced that its Board of Directors (the “Board”) has approved the adoption of a shareholder rights plan (the “Rights Plan”) effective as of April 8, 2025. The Rights Plan was entered into with TSX Trust Company, acting as rights agent under the Rights Plan.
Purpose of the Rights Plan
The primary objective of the Rights Plan is to ensure that all shareholders of the Company are treated fairly in connection with any unsolicited take-over bid (a “Bid”) and to protect against “creeping bids.” A creeping bid refers to the accumulation of more than 20%, on an aggregate basis, of a public company’s issued and outstanding common shares through purchases exempt from applicable take-over bid rules.
Impact on Shareholders
Under the Rights Plan, each common share of the Company will entitle the holder to one right. If a person or group acquires beneficial ownership of more than 20% of the Company’s outstanding common shares, without complying with the provisions of applicable take-over bid rules, then all other shareholders will be entitled to acquire additional rights. These additional rights can then be exercised to purchase additional common shares at a discounted price, diluting the ownership of the acquiring person or group.
Global Perspective
The adoption of a shareholder rights plan is a common defensive tactic employed by companies to protect themselves against potential unwanted takeovers. While the specifics of the plan can vary, the overall goal remains the same: to ensure fair treatment of all shareholders and to maintain the strategic direction of the company.
Effect on You
As an individual investor in Avalon Advanced Materials, the adoption of the Rights Plan may provide you with additional protection if you believe that the current market price of the Company’s shares does not accurately reflect their intrinsic value. By making it more difficult for large shareholders to acquire a controlling stake in the Company without offering a fair price to all shareholders, the Rights Plan can help maintain a level playing field for all investors.
Effect on the World
On a broader scale, the adoption of a shareholder rights plan by Avalon Advanced Materials is indicative of the ongoing trend towards increased shareholder activism and protection. As global markets become more interconnected, companies are increasingly expected to consider the interests of all their stakeholders, including shareholders, employees, customers, and the wider community. By implementing measures like the Rights Plan, companies can help build trust and confidence with their shareholders, which is essential for long-term success.
Conclusion
In conclusion, the adoption of a shareholder rights plan by Avalon Advanced Materials is a proactive step aimed at protecting the interests of all its shareholders. By making it more difficult for large shareholders to accumulate stakes in the Company without offering a fair price, the Rights Plan helps ensure a level playing field for all investors. While the specific impact on individual investors and the broader global community remains to be seen, the trend towards increased shareholder activism and protection is likely to continue, as companies seek to build trust and confidence with their shareholders in an increasingly interconnected world.
- Avalon Advanced Materials adopts shareholder rights plan to protect against unwanted takeovers and creeping bids.
- The Rights Plan entitles each common shareholder to one right, which can be exercised to purchase additional common shares if a person or group acquires more than 20% of the Company’s common shares without complying with applicable take-over bid rules.
- The adoption of the Rights Plan is indicative of the ongoing trend towards increased shareholder activism and protection.
- The Rights Plan helps maintain a level playing field for all investors and ensures fair treatment of all shareholders.
