BOULDER, Colo.—New Frontier Media filed a Form 8-K with the SEC today that contains details of an settlement agreement it consummated yesterday with Longkloof Limited, Hosken Consolidated Investments Limited and various associated parties, to end Longkloof's proxy contest related to the Company's 2012 annual meeting of shareholders and the settlement-related litigation between New Frontier and the Longkloof parties that was filed in Colorado.
In a press release issued yesterday, New Frontier stated, "Under the terms of the settlement agreement, the Longkloof parties, which beneficially own in the aggregate approximately 15.9 percent of the Company's outstanding shares, have agreed to immediately terminate their proxy contest, withdraw their notice of intent to nominate four candidates for election to the Company's Board, and not support, for the balance of 2012, any other person not recommended by the Company's Board in seeking representation on the Company's Board.
"In addition, the Longkloof parties have agreed to certain standstill restrictions through December 31, 2012 and New Frontier has agreed that if the Company does not engage in a sale, merger or similar change of control transaction by December 31, 2012, Longkloof will have the right to designate one person for appointment to the Company's Board for a term expiring at the 2013 annual meeting of shareholders and, under certain circumstances, the Company will be obligated to include such designee on the slate of nominees presented by the Company to shareholders at the 2013 annual meeting of shareholders.
"As part of the settlement agreement, all pending litigation between New Frontier Media and the Longkloof parties will be dismissed by the parties without prejudice and without admission of any wrongdoing by any party. The full agreement will be included as an Exhibit to the Form 8-K that the Company will file with the Securities and Exchange Commission as required by applicable law."
Complete details of the agreement can be found here.
As AVN has reported, Longkloof, from the beginning of its "unsolicited, conditional acquisition proposal" bid to buy New Frontier in March of this year, has been unrelenting in its criticism of the company's Board, pointing to the company's performance as well as compensation of Board members as justufications for its hostile takeover.
The picture was further complicated a few weeks after Longkloof announced its bid when Manwin announced that it, too, was interested in acquiring the company, and made an $1.50.share offer that was higher than Longkloof's $1.35/share bid. The latter company latter upped its offer to $1.75 in May, once again using the occasion to harangue the Board for allegedly dragging its feet with respect to a decision about the offers, and demanding that it act.
New Frontier had formed a "Special Committee of independent members of the Company's Board is overseeing, with the assistance of its legal and financial advisors, a review of strategic alternatives to maximize shareholder value, which includes, but is not limited to, a potential sale of the Company."
In June, New Frontier sued Longlkoof, in order, it said, to "prevent Defendants from frustrating the ability of the Corporation’s Board of Directors and its duly-formed special committee of independent directors from fulfilling the fiduciary duties they owe to ALL shareholders,: and alleging that a group of Longkloof supporters filed filed "false and misleading" SEC reports that failed "to disclose all of the members of its bidding group, or its true plans with regard to [New Frontier]," in order to achieve "preferential treatment" in its bid to take over the Nasdaq-traded media company.
Following the consummation of yesterday agreement, the Special Committee stated, "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. 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."
