It's real news, so read it and moan, baby...
http://www.wallst.net/news/news.asp?Source=MARKETWATCH&guid=%7BF59E229D-E1BD-4569-A97E-0CD31F84A7DF%7D
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Steel Partners proposes New Frontier buyout
Activist tells porn-company board he's willing to pay a premium
By Alistair Barr, MarketWatch
Last Update: 2:03 PM ET Aug 30, 2006
SAN FRANCISCO (MarketWatch) -- The worlds of pornography and hedge funds combined this month when activist-investment firm Steel Partners proposed a management buyout of New Frontier Media Inc., an adult-entertainment company.
During a recent New Frontier board meeting, Steel Partners manager Warren Lichtenstein told directors he was interested in leading a management buyout of the company and was willing to pay a premium, according to a Tuesday regulatory filing. Lichtenstein declined to state a price or a specific premium that he was prepared to offer for the business, and executives at New Frontier (NOOF) haven't received any more "substantive" information about a possible bid other than what the Steel Partners manager presented to the board, the company said in the filing.
New Frontier jumped 8.3% to $8.54 during afternoon trading on Wednesday. More than 750,000 shares traded -- more than nine times the average daily volume during the past 10 days.
"We view the news of Steel Partners finally stating its intentions as an indication that New Frontier Media will likely be put into play (at least in investors' minds), and we could therefore see a ramp in the shares," wrote Eric Wold, an analyst at Merriman Curhan Ford & Co., in a note to clients on Wednesday. "We would be an aggressive buyer of New Frontier below $10 on any run-up."
Wold said that New Frontier would make an attractive buyout candidate because the company generates strong cash flow, has a chunk of cash on its balance sheet and operates a highly profitable business model that could be leveraged by adding debt. The company also has been gaining market share against Playboy Enterprises Inc. (PLA) and recently raised 2007 earnings forecast, the analyst added.
Steel Partners is one of a number of activist hedge funds that take big stakes in companies, push for strategic changes and sometimes try to gain control of whole businesses. In the past year, other activists -- such as Carl Icahn, Nelson Peltz and Pershing Square -- have tried to shake things up at Time Warner Inc. (TWX) , H.J. Heinz Co. (HNZ) and McDonald's Corp. (MCD) Steel Partners had been buying shares of New Frontier for more than a year, but hadn't made its intentions clear until the board meeting on Aug. 15, according to Wold.
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We'll c how this goes...
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