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New Frontier Reacts to Longkloof Takeover Attempt

New Frontier Reacts to Longkloof Takeover Attempt
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May 3, 2012 12:30 PM PDT    Text size: 

BOULDER, Colo. — Adult transactional TV provider New Frontier Media's current board in a terse public statement yesterday said that it will attempt to fend off a shareholder battle for board seats and possible control of the company.

The announcement by New Frontier's board was directed at London-based Longkloof Ltd., which has been identified as a division of Hosken Consolidated Investments, which this week said it intends to nominate four individuals to New Frontier's board at its upcoming annual meeting of shareholders.

Longkloof is New Frontier's largest stockholder and, according to New Frontier's board, has been building up its holdings for the past 18 months.

Hosken's Longkloof unit earlier this year made a bid to acquire the Boulder, Colo.-based company for $1.35 per share of the stock it doesn't own. Adult entertainment giant Manwin, one month after Longkloof's bid, offered to buy the adult entertainment distributor for $1.50 per share.  

Hosken Consolidated Investments is a public company based in Cape Town, South Africa, that trades on the Johannesburg Stock Exchange under the ticker HCL.

In a statement Wednesday, Alan L. Isaacman, chairman of New Frontier Media’s special committee designed to evaluate the Hosken and Manwin bids, said that Hosken's announcement to attempt to place four members of its company represents a potential takeover battle that will be costly.

“Hosken’s threatened proxy contest is a transparent attempt to take control of New Frontier Media by placing four of Hosken’s hand-picked candidates on New Frontier Media’s six-member board who would then be in a position to give favorable consideration to Hosken’s unsolicited $1.35 per share offer.” Isaacman said.

“It is unfortunate that rather than choosing to engage constructively with the Special Committee’s financial advisor, Hosken has chosen to launch a potentially costly and distracting proxy contest.”

New Frontier said that Hosken and its affiliated companies have turned deaf when it comes to its requests for conditions, financing, timing and any government approvals.

"To date, more than three weeks later, the Hosken affiliate, while acknowledging receipt of the information request, has not provided any of the information requested or otherwise engaged in discussions with the Special Committee’s financial advisor," the company said in a statement.

"In addition, Hosken has given no indication to New Frontier Media that it is prepared to increase its proposed offer price in light of Manwin’s publicly disclosed higher competing proposal."

New Frontier, however, did say that company officials did meet with Hosken representatives, including a recent meeting with Marcel Golding, the executive chairman of Hosken, and Hosken’s U.S. representative, Adam Rothstein.

"New Frontier remains open to having future discussions with Hosken provided they are constructive," the company said. "However, the disparaging and inflammatory tone of Hosken’s various communications, in particular its [initial press release on a planned takeover of the company], both of which contain false and misleading statements, together with Hosken’s threatened proxy contest do not promote a constructive dialogue between New Frontier Media and Hosken or its representatives."

Hosken said that its four board nominees are Eric Doctorow, a former Paramount Pictures exec; Mahomed Khalik Ismail Sherrif, who is COO of Hosken unit Sabido; Willem Deon Nel, Sabido's CFO; and Barbara Wall,  a former Lionsgate exec.

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