Outdoor Channel Fires Back at Disgruntled ShareholderClaims in SEC Filings UTR LLC is Failed Suitor “Party A” 2/25/2013 4:41 AM Eastern
About three weeks before it is scheduled to put its proposed merger with InterMedia Partners to a vote in a special meeting with stockholders, Outdoor Channel Holdings is fighting back at accusations from a disgruntled former suitor.
UTR LLC, a Beverly Hills private equity firm that represents unidentified “high net worth individuals,” sent a letter to Outdoor Channel’s board of directors on Feb. 12, claiming that the company ran a flawed auction process and that its pending merger agreement with InterMedia is not in the best interest of shareholders. According to a report last week in the New York Post, UTR said it had a competing offer from a group of “Hollywood heavy hitters” that would top the deal with InterMedia. UTR also claimed in the letter to own about 2% of Outdoor Channel stock, or about 550,000 shares.
According to a statement, UTR called for an immediate halt to the merger, adding that the InterMedia deal does not represent the best deal for shareholders.
UTR's chances of successfully blocking the deal are slim -- Outdoor Channel founders Perry and Thomas Massie, who own about 36% of the company's outstanding stock, have already said they would vote in favor of the deal.
In a filing with the SEC on Monday, Outdoor Channel said in a Feb. 22 discussion with shareholder activist group Institutional Shareholder Services (ISS), the company disclosed it had “participated in discussions regarding a potential transaction with a group that included UTR” prior to entering into its InterMedia deal. In addition, Outdoor disclosed that the UTR group is referred to as “Party A” in its proxy statement filed with the SEC on Feb. 13.
According to that proxy, Party A had made several proposals to Outdoor, including cash offers valued at between $7 and $7.50 per share. But after repeated requests to UTR divulge its sources of financing went unanswered, Outdoor move on to other potential suitors.
“[A]fter nine months of repeated requests to UTR for a firm proposal with details on its proposed equity and debt financing, the UTR related group never submitted a firm proposal,” Outdoor said in the most recent filing.
The Company also confirmed it was in receipt of a letter from UTR, dated February 12, 2013, stating its position that Outdoor Channel’s proposed transaction with InterMedia was not in the best interests of the Outdoor Channel stockholders. Further, the Company confirmed that it was aware of recent media reports regarding UTR.
“The Board of Directors of Outdoor Channel has reviewed UTR’s letter and the related media reports and believes that the proposed transaction with [InterMedia] is in the best interests of Outdoor Channel and its stockholders,” the company said in the most recent filing.
Outdoor Chanel is scheduled to hold a special meeting of shareholders on March 13 to approve the deal. According to the transaction announced on Nov. 16, Outdoor and InterMedia Holdings, parent of the Sportsman Channel, would create a new publicly traded company, InterMedia Outdoor Holdings (IMOH).
Outdoor shareholders have the option of accepting $8 per share in cash for their Outdoor Channel shares — an 11% premium to their close Nov. 15 — or one share of the new entity for every Outdoor share they own, according to the deal. The two companies have set aside $115 million in cash to distribute to shareholders. In addition, Outdoor also declared a special one-time dividend of 25 cents per share in cash that will be distributed on or about Dec. 7 to shareholders of record as of Nov. 27. After the deal closes, Outdoor shareholders are expected to control about 32.4% of the new entity, with InterMedia controlling the remaining 67.6%.