Bitfarms Ltd. (Nasdaq/TSX: BITF), a global Bitcoin data center company, has announced the adoption of a new shareholder rights plan following a decision by the Capital Markets Tribunal of the Ontario Securities Commission to cease trade the company’s previous rights plan, according to GlobeNewswire.

Tribunal Decision

The Tribunal’s verdict came after hearings on July 22 and 23, 2024. The decision effectively terminates Bitfarms’ former shareholder rights plan, which was initially put in place to preserve the integrity of the independent Special Committee’s strategic review process amid attempts by Riot Platforms, Inc. to acquire the company.

New Shareholder Rights Plan

In response to this development, Bitfarms’ Board of Directors has unanimously approved a new shareholder rights plan. The plan, effective from July 24, 2024, aims to ensure fair and equal treatment of all shareholders in connection with any unsolicited take-over bid or acquisition of control of the company. The new plan also provides protection against ‘creeping bids,’ where an entity accumulates 20% or more of the company’s shares through exempt purchases from Canadian take-over bid rules.

“The Tribunal has decided to cease trade Bitfarms’ Rights Plan, which effectively terminates the plan. In light of this decision, the Bitfarms Board has adopted the New Rights Plan to ensure the interests of all shareholders are protected,” said Brian Howlett, Lead Director of the Bitfarms Board.

Provisions and Effectiveness

The new rights plan stipulates that one right will be issued and attached to each common share outstanding as of August 6, 2024. These rights will become exercisable if any person, together with related persons, acquires or announces the intention to acquire 20% or more of the company’s common shares without complying with the ‘Permitted Bid’ provisions. A ‘Permitted Bid’ is defined as a take-over bid that meets specific conditions, including being open for 105 days and no shares being taken up unless more than 50% of shares held by independent shareholders are tendered.

The new plan is subject to shareholder ratification within six months. If ratified, it will have an initial term of three years. The plan also requires acceptance by the Toronto Stock Exchange (TSX), which may defer its consideration pending satisfaction that no further intervention by the securities commission will occur.

Company Overview and Future Prospects

Founded in 2017, Bitfarms operates 12 data centers and is developing two more across four countries. The company is committed to using sustainable energy, primarily hydro-electric power. Despite the Tribunal’s decision, the Board emphasized that it remains committed to maximizing value for shareholders and achieving the best possible outcomes for the company.

Bitfarms has engaged Moelis & Company LLC as its financial advisor, with legal advice provided by Skadden, Arps, Slate, Meagher & Flom LLP, Peterson McVicar LLP, and McMillan LLP. Strategic advice and proxy solicitation support are being provided by Innisfree M&A Incorporated and Laurel Hill Advisory Group.

The new rights plan is seen as a measure to protect shareholder interests amid potential acquisition attempts, ensuring that any such bids are conducted fairly and transparently.

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