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InterMedia Outdoor Holdings, Inc. Submits Letter To Board Of Directors Of Outdoor Channel Holdings, Inc.

NEW YORK, March 4, 2013 /PRNewswire/ -- On March 3, 2013, InterMedia Partners VII, L.P. and InterMedia Outdoor Holdings, Inc. ("IMOH") submitted a letter to the members of the board of directors of Outdoor Channel Holdings, Inc. (Nasdaq: OUTD), expressing their belief that the conditional proposal to acquire all of the outstanding common stock of OUTD submitted by Kroenke Sports & Entertainment, LLC cannot constitute a "Superior Proposal" (as defined in OUTD's Merger Agreement, dated November 15, 2012, with IMOH and certain affiliated entities) relative to the IMOH cash and stock transaction.

A copy of the Letter is included below.


March 3, 2013

Board of DirectorsOutdoor Channel Holdings, Inc.43445 Business Park Drive, Suite 103 Temecula, CA 92590

Dear Members of the Board of Directors:

We are aware of your determination to engage in discussions with Kroenke Sports & Entertainment, LLC ("KSE") regarding their conditional proposal to acquire all of the outstanding common stock of Outdoor Channel Holdings, Inc. ("OUTD") in an all-cash transaction at a price of $8.75 per share (the "KSE Proposal"). 

Despite the Board's determination that the KSE Proposal "would reasonably be expected to result in a Superior Proposal" (as defined in OUTD's Merger Agreement, dated November 15, 2012, with InterMedia Outdoor Holdings, Inc. ("IMOH") and certain affiliated entities (the "InterMedia Agreement")), we are writing today to make unequivocally clear our position that the KSE Proposal cannot constitute a Superior Proposal relative to the IMOH cash and stock transaction.  Our transaction, which can be consummated in less than two weeks, provides OUTD stockholders with a more attractive and valuable combination of cash today and stock in a much larger and more valuable enterprise. 

KSE's proposal letter to OUTD asserted that the valuation in the fairness opinion delivered by Lazard Freres & Co LLC ("Lazard") on November 15, 2012 in respect of our transaction supports their contention that the KSE Proposal is superior.  However, since the delivery of the fairness opinion on November 15, 2012, multiples for comparable companies have expanded meaningfully and therefore the Lazard fairness opinion no longer reflects the current value of the IMOH transaction.  Had the valuation of the stock portion of the IMOH transaction been refreshed for the impact of current multiples, we believe OUTD would have seen that the KSE Proposal lands at the bottom of the range of values for the pending transaction with IMOH.  Further, we believe that  the fairness opinion understated the value of synergies and when those synergies are allocated to each segment and afforded current market multiples, there is conservatively an incremental 30-40 cents per share of value.  Also, our significant ongoing work on the planned integration of the three merging companies has, in our view, yielded additional potential synergies of $2–$4 million.

Thus, utilizing current multiples, the allocation of synergies to the segment with respect to which they are applicable and the most recent estimates of achievable synergies, it is clear that the KSE Proposal falls below the bottom end of the range of the pending transaction with IMOH and is nearly $2.00 below the high end of the range.  Furthermore, the KSE Proposal deprives the OUTD stockholders of the significant equity upside which the combined integrated company can deliver in the future.

While we respect the Board's obligation to fulfill its fiduciary duties to OUTD's stockholders it should be mindful of its obligations under the InterMedia Agreement and our belief that the KSE Proposal did not and cannot constitute a "Superior Proposal." We are confident that our business combination transaction delivers far greater value to OUTD's stockholders today than the KSE Proposal. 

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