Bitfarms Ltd. Implements New Shareholder Rights Plan
Bitfarms Ltd. (Nasdaq/TSX: BIT), a prominent Bitcoin data center company globally, recently introduced a new shareholder rights plan. This decision comes in the wake of the Ontario Securities Commission Tribunal’s choice to halt the company’s previous plan, as reported by GlobeNewswire.
Decision by the Tribunal
Following hearings on July 22 and 23, 2024, the Tribunal made the call to terminate Bitfarms’ former shareholder rights plan. Initially implemented to safeguard the integrity of the independent Special Committee’s strategic review process, this plan was introduced amidst acquisition efforts by Riot Platforms, Inc. aimed at Bitfarms.
Introduction of the New Shareholder Rights Plan
In light of the Tribunal’s decision, the Board of Directors at Bitfarms unanimously approved a new shareholder rights plan. Effective July 24, 2024, this plan’s primary objective is to ensure equitable treatment of all shareholders during any unsolicited take-over bid or acquisition attempt involving the company. Additionally, the new plan offers protection against ‘creeping bids,’ where an entity amasses 20% or more of the company’s shares through exempt purchases from Canadian take-over bid regulations.
Key Provisions and Effectiveness
The new rights plan specifies the issuance of one right per common share outstanding as of August 6, 2024. These rights will be exercisable in the event of any individual, along with related entities, acquiring or announcing the intention to acquire 20% or more of the company’s common shares without adhering to the ‘Permitted Bid’ conditions. A ‘Permitted Bid’ must meet specific requirements, such as remaining open for 105 days and ensuring no shares are accepted unless over 50% held by independent shareholders are tendered.
Shareholder ratification within six months is essential for the new plan, which, if approved, will have an initial three-year term. The plan’s acceptance by the Toronto Stock Exchange (TSX) is also required, with a potential deferral pending confirmation of no further intervention from the securities commission.
Overview of Bitfarms and Future Outlook
Established in 2017, Bitfarms presently operates 12 data centers and is in the process of developing two more facilities across four countries. The company places significant emphasis on using sustainable energy sources, with a primary focus on hydro-electric power. Despite recent developments, the Board reiterates its dedication to maximizing shareholder value and securing the best outcomes for Bitfarms.
Bitfarms has enlisted the services of Moelis & Company LLC as its financial advisor, supported by legal counsel from Skadden, Arps, Slate, Meagher & Flom LLP, Peterson McVicar LLP, and McMillan LLP. Strategic advice and proxy solicitation assistance are being provided by Innisfree M&A Incorporated and Laurel Hill Advisory Group.
The introduction of the new rights plan is viewed as a proactive measure to safeguard shareholder interests in the face of potential acquisition endeavors, ensuring that any such bids are conducted with fairness and transparency.
Hot Take: A Secure Future for Shareholders at Bitfarms
As an investor in the crypto space, staying informed about regulatory decisions and corporate strategies is crucial for safeguarding your interests. Bitfarms’ adoption of a new shareholder rights plan signifies the company’s commitment to transparency and fairness in all shareholder dealings. By prioritizing equitable treatment and protection against external acquisition threats, Bitfarms is paving the way for a secure and prosperous future for its investors.
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