BOULDER, Colo. — As the LFP Broadcasting/New Frontier Media merger deal gets off the ground, the former CEO of New Frontier Media on Tuesday said he plans to sue, claiming he was wrongfully terminated from the company.
Michael Weiner, the former New Frontier Media CEO who co-founded the adult pay-per-view and video-on-demand company in 1997 and was discharged last month, said that he will commence legal proceedings to prove his actions "have always been in the best interests of shareholders."
Weiner, in a letter to New Frontier Media shareholders, said that he has raised significant concerns with the independence and conduct of the company's special committee, which was formed to review alternatives after an acquisition proposal from Longkloof, the company’s largest stockholder, as well as Manwin, which also made a bid for the transactional TV service.
New Frontier Media, which had been on the block for much of the year, accepted a $33 million cash offer from LFP Broadcasting on Monday to purchase the Boulder, Colo.-based company.
"Instead of negotiating with Longkloof to receive a higher offer price than Longkloof’s revised bid of $1.75 per share, the special committee filed an expensive lawsuit against Longkloof without a full vote of the board and without first consulting with me," Weiner said in the letter. "I have consistently expressed to the current directors my belief that the lawsuit was ill-advised from both a strategic and economic standpoint and the allegations in the lawsuit about me were baseless."
Weiner also claimed he also was left "in the dark" about the special committee's actions, which paralyzed his ability to act as the company's chief executive and chairman.
In a response to Weiner, New Frontier Media's board of directors yesterday came out swinging in a follow-up letter to shareholders.
"It is unfortunate that during your time as chairman of the board and CEO of New Frontier you chose to attack and interfere with the efforts of the special committee to maximize value for all our shareholders," the board wrote. "While you have criticized the length of time our process has taken, you fail to acknowledge the numerous distractions that the special committee has had to contend with in managing its process and the culpability of those, including yourself, that have caused or contributed to these distractions.
"It is probably not a coincidence that, almost exactly a month after your employment as CEO was terminated and you were no longer in a position to cause as many unnecessary distractions for the special committee, we were able to successfully complete our process and enter into the definitive acquisition agreement that we announced [with LFP Broadcasting]."
The New Frontier Media Board went on to say that Weiner appears "committed to continuing to distract our board and deprive our shareholders of the opportunity to receive maximum value for their shares."
"Our transaction with LFP Broadcasting provides our shareholders with liquidity for their shares at a substantial premium plus potential additional consideration tied to the company’s cash balances at the closing of the tender offer," the board wrote. "The frivolous and baseless litigation that you indicate in your resignation letter you are planning against the company can only be seen as attempting to disrupt this value-maximizing transaction and will only serve to deprive our shareholders of some of the potential upside that they stand to receive for their shares."
As Weiner plans litigation, another adult company already embroiled in a lawsuit against New Frontier Media has been knocking at its door.
Private Media Group, in a suit filed this past summer, is seeking $1 million in compensatory damages against New Frontier Media over a licensing deal that went sour.
That breach-of-contract suit, filed at Los Angeles Superior Court, has its roots in a 2007 licensing deal where Private would supply films from its library to the transactional TV network.
Charles Prast, Private's CEO, told XBIZ that while he believes the deal announced Monday "is a win for LFP and for adult TV consumers," its pending suit against New Frontier Media needs to be dealt with. A merger plan released Wednesday between LFP and New Frontier Media, however, discloses that there is no pending litigation that would hold up the deal.
"We look forward to supporting the deal through a resolution of our outstanding litigation, which involves significant amounts owed to Private under agreements made by New Frontier's former management," Prast said.
