BOULDER, CO—Longkloof Limited, the major shareholder in publicly traded New Frontier Media that announced its intention to buy the company in March, has upped its offer while continuing its scathing criticism of the company's board of directors. The new offer of $1.75/share, up from the original of $1.35/share, also puts additional pressure on NOOF's other suitor, Manwin, which announced its own unsolicited offer of $1.50 per share a few weeks following the Longkloof announcement.
"Our offer represents a premium of over 60 percent 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," the company said in a prepared announcement issued today. "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."
Expressing its concern regarding 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," Longkloof said it remains "extremely committed to an acquisition."
Pressing its point, however, the company insisted, "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."
Still incensed about actions it attributes to the board, the company statement added, "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," it continued, "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."
Utilizing both carrot and stick, the company said it intends to file a proxy statement and accompanying proxy card with the SEC, "to be used to solicit Stockholders of New Frontier Media, Inc., and added, "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."