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In a strategic effort to strengthen its commitment to shareholders, Gold Royalty Corp. has announced the adoption of a shareholder rights plan. This initiative, recommended by a newly formed special committee of independent directors, aims to ensure fair and equitable treatment for all shareholders, particularly during unsolicited takeover attempts.
The decision to implement this plan comes after a comprehensive review of recent trading activities. The board’s primary goal is to safeguard the value that shareholders hold in the company while preserving the control premiums crucial during acquisition attempts.
The rationale behind the shareholder rights plan
Gold Royalty’s board recognized that the shareholder rights plan is essential for mitigating risks linked to potential hostile takeovers, which could undermine shareholder value. The plan intends to:
- Encourage potential acquirers to treat all shareholders fairly and equitably.
- Provide adequate time for both the board and shareholders to respond to acquisition proposals in an informed manner, thus protecting their legal rights.
This initiative is noteworthy as it was not triggered by any specific takeover bid, nor is the company aware of any imminent threats regarding acquisition proposals.
Details of the plan’s implementation
Starting from the record date of November 17, each existing common share of Gold Royalty will be linked to one right. This means that any new common shares issued will automatically carry the same rights. If an individual or entity acquires 15% or more of the company without following the stipulated bid provisions, these rights will become active.
In this scenario, shareholders—excluding the acquirer—will be allowed to purchase additional common shares at a price below the prevailing market rate. The plan includes a clause that raises the threshold to 20% for individuals who do not have a standstill agreement with the company.
Impact on Gold Royalty’s operations and future
The introduction of this rights plan is not expected to have an immediate impact on the trading of Gold Royalty’s shares. Shareholders need not take any action, as the rights will be issued automatically. The plan is set for an initial duration of three years but must be ratified by shareholders within a year of its adoption to remain effective.
If shareholder approval is not secured, the plan will terminate automatically, along with any rights issued under it. The specifics of this rights agreement are documented in a formal contract between Gold Royalty and TSX Trust Company, which acts as the rights agent.
About Gold Royalty Corp.
Gold Royalty Corp. is committed to providing innovative financing solutions tailored to the metals and mining sector. The company seeks to invest in sustainable and responsible mining operations, aiming to build a diversified portfolio of precious metals royalty and streaming interests. This strategy is designed to deliver superior long-term returns for investors.
Gold Royalty’s portfolio primarily consists of net smelter return royalties on gold assets located throughout the Americas.
The decision to implement this plan comes after a comprehensive review of recent trading activities. The board’s primary goal is to safeguard the value that shareholders hold in the company while preserving the control premiums crucial during acquisition attempts.0
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