Mediaboss Marketing

BOULDER, Colo., May 31, 2012 /PRNewswire/ --New Frontier Media, Inc. (NOOF), a leading provider of transactional television services and distributor of general motion picture entertainment, today announced that it has filed a lawsuit in the United States District Court for the District of Colorado against the publicly-traded South African conglomerate, Hosken Consolidated Investments Limited (Johannesburg Stock Exchange: HCI), its Executive Chairman Marcel Golding, Longkloof Limited, Mile End Limited, Sabido Investments, Adam Rothstein, Eric Doctorow, Mahomed Khalik Ismail Sheriff, Willem Deon Nel, and Barbara Wall alleging violations of the U.S. federal securities laws. In the complaint, New Frontier Media alleges that Hosken, Longkloof, Marcel Golding, Adam Rothstein and the other defendants have been acting as a "group" in connection with their involvement in a hostile takeover offer for the Company and a threatened proxy contest against the Company. The suit alleges that the defendants violated Section 13(d) of the Securities Exchange Act of 1934 by not properly reporting their identity and activities as a "group," including that they have failed to disclose that their efforts to acquire control of the Company, whether through a hostile takeover offer or a proxy contest for control of the Company's Board, are being directed and coordinated by Adam Rothstein. The suit also alleges that the purported notice of director nominations provided to New Frontier Media by a Hosken affiliate does not comply with the advance notice of nomination requirements contained in the Company's Amended and Restated Bylaws since it does not disclose Adam Rothstein's involvement in the threatened proxy contest or provide any of the disclosures required by the Bylaws to be made with respect to Adam Rothstein. The suit seeks declaratory and injunctive relief.

As previously announced earlier this month, New Frontier Media has received a purported notice of nomination from a Hosken affiliate that it intends to nominate four individuals, including two employees of a Hosken affiliate, for election to the New Frontier Media Board of Directors at the Company's 2012 Annual Meeting of Shareholders. The notice was received by the Company on April 26, 2012, with only one day remaining before the closing of the advance notice period on April 27, 2012, which period is determined by the Bylaws. At the time, New Frontier Media indicated that it was continuing to review the notice to determine whether the notice complies with New Frontier Media's Bylaws and applicable law.

New Frontier Media believes that the defendants' threatened proxy contest, together with its numerous inflammatory statements attacking the Company, is an attempt to pressure the Company to pre-empt its on-going process for reviewing strategic alternatives, give favorable consideration to the Hosken / Rothstein group's unsolicited, non-binding, conditional acquisition proposal and, accordingly, further the self-interested agenda of the Hosken / Rothstein group to gain control of New Frontier Media.

Since receiving the purported notice of nomination, the Special Committee of independent directors that is overseeing the review of strategic alternatives available for the Company has been, with the assistance of its counsel, reviewing the purported notice of nomination against the requirements of New Frontier Media's Bylaws. As a result of such review, the Special Committee believes that the purported notice does not comply with the Bylaws and that it is necessary and appropriate, due to the significant potential for uncertainty and confusion and the need for the Company to incur substantial expenses to plan for a proxy contest, to have this promptly confirmed with a judicial determination.

The Special Committee also issued the following statement regarding the lawsuit filed in federal court:

"The Special Committee believes that Hosken, Rothstein, Golding and the other members of their group have not been forthright in their communications with our shareholders. The Special Committee is fully committed to protecting the interests of all New Frontier Media shareholders and we intend to aggressively pursue this legal action to protect our shareholders.

The Special Committee also believes that a prompt determination whether Hosken's purported notice of nominations has been validly made is necessary to avoid the unnecessary and substantial expense and confusion that will otherwise be involved in planning for a proxy contest at the 2012 Annual Meeting, preparing the applicable documents required by the U.S. Securities and Exchange Commission in connection with a proxy contest at the 2012 Annual Meeting and holding the 2012 Annual Meeting. The Special Committee also believes that the pendency of the proxy contest has the potential to chill the interest of some potential buyers and will interfere with the Special Committee's goal of maximizing value for all shareholders of the Company.

We remain very disappointed that the Hosken / Rothstein group has made it abundantly clear that it is unwilling to participate on an equal footing with all other bidders in the Special Committee's process for maximizing shareholder value and, instead, has chosen to launch a costly, disruptive and distracting proxy contest to place four of their hand-picked candidates on the New Frontier Media's six-member Board in an apparent attempt to obtain control of the Company. Their recent actions, including their refusal to execute our form of bidder confidentiality agreement, their inflammatory press releases and their refusal to withdraw their costly, disruptive and distracting proxy contest, make clear that, rather than constructively engaging with the Special Committee and accepting our invitation to participate in our process to maximize shareholder value on an equal footing with all other bidders, the Hosken / Rothstein group is attempting to pressure the Special Committee to pre-empt its process and grant the Hosken / Rothstein group's unsolicited, non-binding, conditional acquisition proposal preferential treatment, even if such treatment would deprive other New Frontier Media shareholders of the opportunity to obtain maximum value for their shares.

However, the Special Committee and the other members of the New Frontier Media Board will not be distracted from acting in the best interests of, and maximizing value for, all shareholders. We will also not be deterred from our goal of providing a level playing field for all potential buyers of the Company. Our Board would prefer to avoid a costly and disruptive proxy contest and focus our full attention on realizing New Frontier Media's significant potential. However, we will not stand idly by while the Hosken / Rothstein group pursues their own self-interested agenda to gain control of New Frontier Media."

In connection with New Frontier Media's lawsuit filed today in the U.S. District Court for the District of Colorado against Hosken, Rothstein, Golding and the other defendants named therein, the Special Committee is being assisted by its legal advisor, Alston & Bird LLP.

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New Frontier Media Files Federal Lawsuit Against Hosken Consolidated Investments, Longkloof Limited, Marcel Golding ...