Metromedia International Group Shareholder Pressures Management to Pursue IPO of Company's China E-Commerce Assets
MMG's Poor Performance Cited
NEW YORK, March 2 /PRNewswire/ -- Elliott Associates, L.P., compelled by the failure of Metromedia International Group, Inc. (Amex: MMG - news) to adequately respond to investor concerns regarding MMG's performance and strategic plans, today voiced its profound disappointment. In a letter sent today to Stuart Subotnick, President and CEO of MMG, Elliott reiterated the various initiatives it had called upon management to take in the interest of enhancing shareholder value. Elliott had called for, among other things, an IPO of MMG's China e-commerce assets and the sale or spin-off of the Company's Snapper subsidiary.
The text of the letter follows.
March 2, 2000
Mr. Stuart Subotnick
President and CEO
Metromedia International Group, Inc.
One Meadowlands Plaza
East Rutherford, NJ 07073
Dear Mr. Subotnick:
We are writing to express our profound disappointment regarding Metromedia International Group, Inc.'s (``MMG' or the ``Company') quiescent presentation of strategic initiatives to the investment community. According to the Company's January 18th press release, the Company was to ``begin presenting their conclusions and other strategic plans to the investment community' in February of 2000. We are not aware of any presentations made by the Company in the month of February that give any indication as to the strategic direction of the Company or any affirmative steps taken by the Company to increase the price of MMG common stock. What we have encountered instead is a deafening silence which appears to us as complete indifference to the shareholders.
In your January 17th letter to us you state that you ``believe that all of our shareholders should give our newly-combined telecommunications business and its management a chance to succeed in one of the most difficult business climates in history.' We and the overall market differs with your view of the business climate, as is illustrated by the current high stock prices of Golden Telecom (GLDN), Rostelecom (ROS), Telesystem International Wireless (TIWI), United Pan-Europe Communications (UPCOY), and Vimpel Communications (VIP), to name a few. Indeed, many telecommunications companies, both international and domestic, have achieved increasing market valuations in the recent past. MMG operates in some of the most exciting and highly valued segments of the telecommunications industry. It appears to us that the Company has the potential to provide comprehensive broadband services including voice, video, and data and this potential is by no means adequately reflected in the stock price. We remain mystified at the Company's inability or unwillingness to focus investor attention to this fact.
You state that you ``are excited about the potential to service e-commerce businesses in China, which is why we have directed the Company's resources in this area' yet you believe that there is ``danger of going public before the business is sufficiently mature.' This stance completely ignores the real danger facing MMG shareholders; future IPO markets may not be as hospitable as today. We can think of no other time than the present that the public equity market has afforded such high valuations to internet companies, especially ones with exposure to China. We believe, therefore, that the Company's shareholders would benefit greatly from an immediate IPO of the Company's Chinese e-commerce assets and we further believe that to not vigorously pursue this course of action would be a disservice to all MMG shareholders.
In your letter you state that you ``believe that the Company's cash can be better deployed in operating and expanding the Company's businesses and investments' rather than used to buy back MMG shares in the open market and you further state that Snapper is ``not yet ripe for sale at a price that will maximize its value to our shareholders.' Your position does not seem at all consistent with maximizing shareholder value given the Company's recent history. The Company issued over 24 million shares in its recent acquisition of PLD Telekom. Had the Company previously divested a non-core asset like Snapper together with enacting a share re-purchase program, the price of MMG common stock at the time of the PLD Telekom acquisition might have been materially higher, which would have resulted in the issuance of far fewer shares.
Because of these issues, we are carefully considering our alternatives. In a separate letter to Mr. Arnold L. Wadler, Secretary of the Company, we request that he confirm the date of the 2000 Annual Meeting of Shareholders should we decide to formally submit shareholder proposals to be considered at such meeting and/or submit a slate of candidates for election to the Company's Board of Directors. Additionally, we may engage in discussions with other shareholders of MMG regarding our views towards enhancing shareholder value. It is still our hope that before such time the Company will take affirmative steps that will result in the creation of shareholder value, though we are becoming increasingly skeptical at this prospect.
Sincerely,
ELLIOTT ASSOCIATES, L.P.
By: Paul Singer
Title: General Partner
cc: The Board of Directors of Metromedia International Group, Inc.
Mr. K. Rupert Murdoch, Chairman and CEO of The News Corporation
Limited
Elliott Associates, L.P. is organized to purchase, sell, trade and invest in securities. |
