Vancouver, WA — Sherborne Investors has wasted little time making some changes in the direction of Nautilus Inc. now that it controls the board. Last month, Nautilus' board terminated the company's shareholder rights plan and the purchase of a Chinese manufacturing plant, Land America Health and Fitness Co. Ltd., for $63 million.

The cancellation of the plant purchase would likely cost Nautilus the $18.5 million nonrefundable deposit it had already paid for the plant, according to a U.S. Securities and Exchange Commission filing by the company. Sherborne Investors, which is the largest Nautilus shareholder, had opposed the purchase of the plant since Robert Falcone, president and CEO of Nautilus, announced the plans last year. Sherborne had said that the plant purchase would put the company at a greater financial risk due to fixed expenses and debt load. The plant is one of 12 in Asia that manufactures much of Nautilus' equipment.

The move is expected to save the company $46.5 million, according to Eric Wold, an analyst with Merriman Curhan Ford.

The terminated shareholder plan allowed one right to be distributed for each share of the company's common stock outstanding as of Nov. 8, 2007. It was to expire in 2010 unless terminated or redeemed sooner by the company. The plan noted that if any person or group acquired 20 percent or more of the voting power of the company's outstanding common stock without board approval, their voting power would be diluted.

The plan was put in place last year when Sherborne Investors, which owned 23.5 percent of Nautilus stock, called for the removal of board members and the election of some of its representatives to the board.

Sherborne Investors, which is a Delaware investment firm, was successful in getting Nautilus to hold a shareholder meeting in December. At that meeting, shareholders approved Sherborne Investors' plan to replace four Nautilus board members with Sherborne representatives. That vote put control of the Nautilus board in the hands of Sherborne, which is headed by Edward Bramson.

Last month, the new board elected Bramson as chairman, replacing Falcone, who remains with the company as president, CEO and a member of the board.