Investors owning more than 83% of New Frontier’s stock accepted Larry Flynt’s $33M offer — $2.02 a share, plus a 4 cent a share cash payment right — which expired at midnight. That means the Hustler publisher’s Flynt Broadcast has the votes needed to buy the publicly traded company “without the affirmative vote of any other New Frontier shareholder,” the company says. Still, Flynt will buy additional shares directly from New Frontier, at the same price he offered others, to reach 90% — the threshold that would enable him to complete the deal under Colorado law as a “short-form” merger. New Frontier shares are up 1.5% today to $2.05, a 95% increase over the last 12 months — but down nearly 60% over the last five years as the company struggled to compete with the proliferation of online porn. New Frontier produces VOD features, and offers the Penthouse TV premium channel and pay-per-view services packaged as The Erotic Networks (or TEN) that include Xtsy, Juicy, and VaVoom.
New Frontier shares are up about 35% in after-hours trading following an announcement that seems to mark an end to the battle over pay TV’s top supplier of porn movies and channels. Hustler magazine creator Larry Flynt‘s LFP Broadcasting signed a definitive agreement that values New Frontier at $33M, or $2.02 a share — a 55% premium over today’s closing price. The deal is expected to close by year end. New Frontier says that the board unanimously endorsed the agreement. It ”creates a great opportunity for our organization, cable television partners and customers as two of the premier adult media broadcasting companies join forces,” New Frontier says. Flynt wants to move fast: Within 10 business days, LFP Broadcasting will begin the process by offering shareholders $2.02 per share, without interest — and under certain circumstances he may add as much as 6 cents per share. His offer expires on the 20th business day. In accepting Flynt’s offer, New Frontier rejected a bid from investment firm Longkloof, which owns 15.9% of the company. Last month the company fired CEO and co-founder Michael Weiner, considered by the board to be too closely allied with Longkloof. It also received an offer from Luxembourg-based Manwin, which bought Playboy TV late last year.
The pay TV porn provider and former board member David Nicholas are accusing each of other of trying to secretly rig a potential sale of the company to investment firm Longkloof, according to letters made public today in an SEC filing. Their differences culminated in Nicholas’s September 29 resignation after 10 years on the board — which followed the company’s September 18 firing of company co-founder and CEO Michael Weiner. Nicholas says in his resignation letter that directors on a Special Committee exploring the Longkloof offer “may have breached their fiduciary duties” to shareholders by trying to derail the bid. But New Frontier’s directors sent a letter to Nicholas today that attacked his “baseless and misleading statements” adding that he secretly wanted to sell, and was asked to resign because his “conduct as a member of the Board has been unacceptable.”
The corporate struggle at this little-known company, which is key to the pay TV business, just became a little more interesting. New Frontier announced last night that Michael Weiner “has been terminated” as CEO. It gave no explanation for the decision to oust Weiner, who co-founded New Frontier in 1995. While the board looks for a full-time replacement, the top job will be shared by CFO Grant Williams, Chief Legal Officer Marc Callipari, and Chief Technology Officer Scott Piper. A longtime director, Alan Isaacman, replaced Weiner as chairman. His firing comes as New Frontier’s board tries to chart a path for the company’s future, including a possible sale. The company has received bids from investment firm Longkloof as well as from Luxembourg-based Manwin, which bought Playboy TV late last year.
New Frontier has agreed to add a representative to its board from investment firm Longkloof — which owns 15.9% of the programmer’s shares — if it doesn’t sell itself by year end, the company says this afternoon. In return, Longkloof has dropped its proxy fight to elect four of its allies to the board. The investor firm also dropped its lawsuit charging that New Frontier violated its fiduciary obligation to shareholders by trying to block the proxy fight and by refusing to consider Longkloof’s purchase offer. New Frontier’s board has already designated a Special Committee to review a possible sale. The committee hired Alston & Bird and Avondale Partners to advise on legal and financial issues. “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,” the Committee said. Luxembourg-based Manwin — which bought Playboy TV late last year — has also offered to buy New Frontier. New Frontier’s shares are up 48.5% so far in 2012 as it appeared more likely that it will be sold. New Frontier produces VOD features, it also offers the Penthouse TV premium channel and pay-per-view services packaged as The Erotic Networks (or TEN) that include Xtsy, Juicy, and VaVoom.
The weird battle over the cable industry’s top supplier of porn channels and videos just became a little more interesting. New Frontier shares rocketed 11.8% to $1.70 today after its largest investor, Longkloof Limited, raised its purchase offer to $1.75 a share from $1.35 — valuing New Frontier at about $28.3M. The new offer tops a separate $1.50 a share offer from Luxemburg-based porn company Manwin Holding, which last year bought Playboy’s TV and digital businesses. In April, New Frontier hired Avondale Partners to help sort through strategic alternatives. Longkloof, which owns about 15% of New Frontier, has said that it will nominate a slate of potential directors but insists that it wants to buy the company, not take control in a proxy fight. New Frontier produces VOD features, it also offers the Penthouse TV premium channel and pay-per-view services packaged as The Erotic Networks (or TEN) that include Xtsy, Juicy, and VaVoom.
New Frontier shares are up 11.4% to $1.37 at mid-day after Luxembourg-based Manwin — which bought Playboy TV late last year — offered $1.50 a share, about $24.3M. That tops the hostile $1.30 a share bid earlier this month from investment company Longkloof Limited. Manwin Managing Partner Fabian Thylmann says his company’s experience with Playboy TV “proves to us the value of TV as a distribution platform” as it seeks to expand its pay TV porn business. “New Frontier Media’s business is a natural fit which should create synergies immediately benefiting both Manwin’s pay TV providers and their customers.” Although New Frontier is not well known, it’s important to pay TV providers: They make a bundle from porn channels and services. New Frontier produces VOD features, it also offers the Penthouse TV premium channel and pay-per-view services packaged as The Erotic Networks (or TEN) that include Xtsy, Juicy, and VaVoom. But the company, whose stock traded for more than $9.00 five years ago, has fallen into the doldrums. Longkloof blamed the board for being “more focused on maintaining its excessive director fees and engaging in related party transactions, rather than running the Company in the best interest of the stockholders.” By contrast, Manwin says that it is “highly impressed with New Frontier Media, its board of directors, management team and operations but believes it has been undervalued in the public markets because of its size and market …
UPDATE, 1:50 PM: New Frontier says that its independent directors have formed a Special Committee to examine Longkloof’s takeover offer. The directors will conduct a “timely” review. But the company adds that “no definitive time frame has been determined” — and the review “will be conducted in a manner that will minimize any disruptions to New Frontier Media’s business operations.” Law firms Blank Rome and Holland & Hart will provide legal advice, and the company is looking for a financial advisor.
PREVIOUS, 12:54 PM: New Frontier stock is up about 15% to $1.30 a share this afternoon after investment company Longkloof Limited offered to pay about $18.8M, or $1.35 a share, for the company. The proposal would cover the 85% of New Frontier shares not already owned by Longkloof, which is based in the Channel Islands. Although the amount is modest in entertainment industry terms, a deal could be important for pay TV providers: New Frontier is a power in porn, the corner of the business that execs don’t like to talk about. The company produces VOD features, it also offers the Penthouse TV premium channel and pay-per-view services packaged as The Erotic Networks (or TEN) that include Xtsy, Juicy, and VaVoom. Longkloof says that it wants to move in because “we believe the current Board is more focused on maintaining its excessive director fees and engaging in related party transactions, rather than running the Company in the best interest of the stockholders.” …