Longkloof Limited Increases Offer for New Frontier Media to $1.75 Per Share

 Longkloof Limited Increases Offer for New Frontier Media to $1.75 Per Share

PR Newswire

ST. HELIER, Jersey, Channel Islands, May 23, 2012

ST. HELIER, Jersey, Channel Islands, May 23, 2012 /PRNewswire/ --Longkloof
Limited today announced that it has sent a letter to the Board of Directors of
New Frontier Media, Inc. (Nasdaq: NOOF) increasing its offer to acquire all of
New Frontier Media's outstanding common stock to $1.75 per share. Longkloof
currently beneficially owns 15.9% of the outstanding shares of common stock of
New Frontier Media.

The full text of the letter is as follows:

New Frontier Media, Inc.
6000 Spine Road, Suite 100
Boulder, CO 80301

Attn: Michael Weiner, Corporate Secretary

23 May 2012

Dear Sirs

As the single largest shareholder of New Frontier Media, Inc., we remain
extremely concerned with the actions (or shall we say "inactions") of the
Special Committee since we first made public on March 9, 2012 our proposal to
acquire the Company in an all cash transaction. We remain extremely committed
to an acquisition and are hereby increasing our offer to a price of $1.75 per
share in cash. Our offer represents a premium of over 60% to the Company's
average closing stock price from the start of this year until February 15,
2012, the date on which we first contacted you expressing our interest in an
acquisition. In an effort to be completely transparent we thought it is in
the best of interests of all shareholders for us to make our offer public. We
urge the Board of Directors to similarly embrace the spirit of transparency.

We believe we have provided the Special Committee with all relevant material
information relating to our proposal. We further note that we have not
requested, and do not believe that we need, any material non-public
information to complete this acquisition on the terms described herein.
However, if the Special Committee is willing to provide us access to such
information under reasonable and customary terms and conditions that would not
preclude us from taking actions which would be in the best interests of all
shareholders, we would consider such new information in putting forth our best
possible offer. It is time for the Special Committee to allow the
shareholders, the true owners of the Company, to decide for themselves whether
our proposal—providing immediate liquidity at a substantial premium—is a
better alternative to the Board of Director's current misguided,
time-consuming and value-wasting strategy of remaining a public company and
paying the associated exorbitant costs, including the excessive and
unnecessary board fees to its non-management directors.

We believe that the Chairman of the Special Committee mischaracterized our
intentions when he stated our "threatened proxy contest is a transparent
attempt to take control of New Frontier Media." For the record, let us be
explicitly clear—our intentions are to acquire New Frontier Media in an all
cash transaction representing a substantial premium for all shareholders. To
this end, we fully support the Special Committee's stated objective of "acting
in the best interests of, and maximizing value for, all shareholders", and are
prepared at this time to allow for a "go shop" period in a definitive
agreement. We are also prepared to participate in an auction process to
ensure that shareholders receive fully-negotiated, full and fair value for
their shares, and look forward to receiving the promised bid letter from the
Special Committee's financial advisor. All we ask is that the members of the
Special Committee act quickly, exercise their fiduciary duties and live up to
their mandate before further shareholder value is destroyed.

We want to remind shareholders that the Board of Directors has not responded
to the request in our March 9th letter that it publicly disclose the
cumulative amounts of all the fees and compensation (including reimbursed
expenses) that the directors have each collected or expect to collect, as well
as fees for work their respective firms have charged the Company, this fiscal
year, including any fees payable to the members of the Special Committee. Nor
has the Special Committee responded to our advance notice of our intention to
nominate a slate of nominees for directors at the next annual meeting. Are
they looking to further delay the process (such as by delaying the annual
meeting) or force a time consuming and value-destroying litigation when we
clearly have the best interests of all shareholders in mind? Shareholders
should not stand by while the Board of Directors takes steps to further
entrench themselves. We hope that the Special Committee will finally take its
fiduciary duties seriously and not continue to use our offer as a
justification for paying itself additional fees.

Our offer continues not to be subject to a financing contingency, and we
anticipate that there would be limited conditions to closing, including
retention of management, the state of the balance sheet, no material adverse
change, and that New Frontier Media obtains all necessary corporate and
regulatory approvals. In addition, we urge the Company to refrain from
establishing any new or additional "change of control" or similar obligations
or otherwise taking actions which further erode shareholder value.

Although we remain optimistic that we can reach an agreement that benefits all
of New Frontier Media's shareholders in a timely manner, we are committed to
protecting the value of our investment and continue to be prepared to pursue
any and all actions available to us in order to maximize all shareholders'
interests. We believe it is imperative upon the Special Committee to allow
the shareholders to decide for themselves the future of this company,
including whether to accept our offer, or, if one is received, a higher and
better offer, or to reject all offers. Under any of these circumstances, we
will be content in knowing that it was OUR actions that resulted in greater
shareholder value and choice. If the shareholders reject all offers, we will
roll up our sleeves as a significant shareholder and hopefully under the
guidance of a better qualified and more appropriately compensated Board of
Directors seek to further enhance value for all shareholders.

Of course, no binding obligation on the part of New Frontier Media or the
undersigned shall arise with respect to the proposal or any transaction unless
and until such time as definitive documentation satisfactory to us and
approved by New Frontier Media's Board of Directors is executed and delivered.

We would like to move forward immediately and are ready to meet and start
immediate negotiations to maximize value for all shareholders. It is our
belief that this offer is fair and in the best interest of the Company and its
shareholders, and that the shareholders will find such a proposal attractive
if presented to them.

Yours faithfully

Longkloof Limited

Additional Information Concerning Participants

Longkloof, together with the other Participants (as defined below), intends to
make a preliminary filing with the SEC of a proxy statement and accompanying
proxy card to be used to solicit votes for the election of its slate of
director nominees at the 2012 Annual Meeting of Stockholders of New Frontier
Media, Inc.

LONGKLOOF STRONGLY ADVISES ALL NEW FRONTIER MEDIA SHAREHOLDERS TO READ THE
PROXY STATEMENT AND OTHER PROXY MATERIALS RELATING TO THE INTENDED
SOLICITATION OF PROXIES BY LONGKLOOF AS THEY BECOME AVAILABLE BECAUSE THEY
WILL CONTAIN IMPORTANT INFORMATION, INCLUDING INFORMATION RELATING TO THE
PARTICIPANTS IN SUCH PROXY SOLICITATION. SUCH PROXY MATERIALS WILL BE
AVAILABLE AT NO CHARGE ON THE SEC'S WEBSITE AT HTTP://WWW.SEC.GOV. IN
ADDITION, THE PARTICIPANTS IN THE SOLICITATION WILL PROVIDE COPIES OF THE
PROXY STATEMENT WITHOUT CHARGE UPON REQUEST. REQUESTS FOR COPIES SHOULD BE
DIRECTED TO THE PARTICIPANTS' PROXY SOLICITOR.

The Participants in the proxy solicitation are anticipated to be Longkloof,
Mile End Limited ("Mile End"), HCI, Sabido, Marcel Golding, Eric Doctorow,
Mahomed Khalik Ismail Sherrif, Willem Deon Nel and Barbara Wall (each, a
"Participant" and collectively, the "Participants"). Information about the
Participants will be set forth in the proxy statement filed by Longkloof with
the SEC. As of the date hereof, Longkloof and Mile End may be deemed to
beneficially own 2,578,831 shares of common stock of New Frontier Media,
representing approximately 15.9% of the outstanding shares of common stock, as
follows: (i) 2,175,100 shares are owned directly by Longkloof, and (ii)
403,731 shares are owned directly by Mile End. Marcel Golding is affiliated
with Mile End and also serves as Executive Chairman of HCI, the indirect 100%
owner of Longkloof. Consequently, Longkloof may be deemed to be a beneficial
owner of the 403,731 shares of common stock held by Mile End. Similarly, Mile
End may be deemed to be a beneficial owner of the 2,175,100 shares of common
stock held by Longkloof. However, the foregoing should not be construed in
and of itself as an admission by Longkloof as to beneficial ownership of the
shares of common stock held by Mile End, nor should the foregoing be construed
in and of itself as an admission by Mile End as to beneficial ownership of the
shares of common stock held by Longkloof. As of the date hereof, none of HCI,
Sabido, Marcel Golding, Eric Doctorow, Mahomed Khalik Ismail Sherrif, Willem
Deon Nel and Barbara Wall directly own any securities of New Frontier Media.
As members of a "group" for the purposes of Rule 13d-5(b)(1) of the Securities
Exchange Act of 1934, as amended, each of the Participants may be deemed to
beneficially own the shares of common stock of New Frontier Media beneficially
owned in the aggregate by the other participants. Each of the Participants
disclaims beneficial ownership of the shares he/she/it does not directly own.

SOURCE Longkloof Limited
 
Press spacebar to pause and continue. Press esc to stop.