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New Frontier Media Settles Proxy Contest, Related Litigation

 New Frontier Media Settles Proxy Contest, Related Litigation
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Jul 12, 2012 9:00 PM PDT    Text size: 

BOULDER, Colo. -- New Frontier Media Inc. said Thursday evening that it has settled its proxy contest and legal battle with Longkloof Ltd.

Adult transactional TV distributor New Frontier Media reached a settlement agreement with the Channel Islands-based Longkloof, according to a press release.

The settlement ends a proxy contest waged by Longkloof and closes ongoing litigation between the two companies.

Longkloof, which owns 15.9 percent of New Frontier Media, made an unsolicited offer to acquire the remaining outstanding shares of New Frontier Media earlier this year.

The proxy battle included a bid by a Longkloof firm to nominate four people to New Frontier Media's six-person board of directors and ended up at U.S. District Court in Denver.

As part of the settlement agreement, Longkloof said it would withdraw the board nomination and not support any board candidates not recommended by New Frontier for the remainder of 2012, according to the release.

Also, if New Frontier Media does not engage in a sale, merger or change of control by Dec. 31, Longkloof would have the right to nominate one person to New Frontier's board for a term expiring at the 2013 annual shareholder meeting.

All pending litigation between the respective parties will be dismissed without prejudice and without admission of any wrongdoing.

"We are pleased to have reached this mutually beneficial agreement with the Longkloof parties, and believe that this settlement, which avoids a potentially costly and distracting proxy contest and the related litigation, is in the best interests of New Frontier Media and our shareholders," New Frontier said in a statement.

"With these matters now fully resolved, the special committee can concentrate entirely on its ongoing strategic review process, which encompasses evaluating, among other options, acquisition proposals received from the Longkloof parties and other parties."

Longkloof, which has been identified as a division of London-based Hosken Consolidated Investments, made claims in June against New Frontier Media's management because its board breached fiduciary duties in denying Longkloof's nomination of a slate of four directors and in stonewalling Longkloof's previously announced offer to acquire the company.

Longkloof's made an offer to bid $1.75 a share for shares it doesn't already own, topping a competing bid by Manwin, which offered $1.50 a share.

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