In re MTRM: Esopus Creek Capital, LLC Announces That it Has Sent the Following Letter to Mark S. Hauf, Chairman of Metromedia International Group, Inc. (OTC Bulletin Board: MTRM) (Pink Sheets: MTRMP)
Wednesday March 23, 5:57 pm ET
NEW YORK, March 23 /PRNewswire/ --
Esopus Creek Capital, LLC
500 Fifth Avenue
New York, NY 10110
March 23, 2005
Mark S. Hauf
Chairman/President/ CEO
C/O Metromedia International Group, Inc.
505 Park Avenue
New York, New York 10022
Via Federal Express
Mr. Hauf:
Esopus Creek Capital LLC, Esopus Creek Partners LLC, and its members are the beneficial owners of approximately 3% of Metromedia International Group, Inc. ("MTRM" or "Company") [(OTC Bulletin Board: MTRM - News; Pink Sheets: MTRMP - News)]. Given our substantial investment in the Company, we write to express our concern that you and the Board of Directors ("Board") are failing to faithfully discharge the fiduciary duties you and the Board owe to shareholders and MTRM itself.
Our many well-founded concerns may be summarized as follows: You and the Board contemptuously failed to convene an annual meeting for election of directors during 2004; this is a direct violation of Delaware law. As a result of your disenfranchisement of MTRM shareholders, we were offered no choice but to commence legal action. We withdrew that action in light of your February 9, 2005, announcement that if the Company did not enter a definitive agreement requiring shareholder approval on or prior to March 7, 2005, you would convene a stockholders' meeting. To date, however, although the Company did announce such a definitive agreement, no meeting has been scheduled and it appears that an annual meeting for the election of directors is many months off.
Under most circumstances this act alone would be conclusive evidence that you and the Board were derelict. Further, however, in the fall of 2004 you entered into an extraordinarily unfair exclusivity arrangement to sell the Company's assets to a potential investor group. Disturbingly, you and the Board accepted an inadequate potential value of $300 million for all of the Company's assets, rather than conduct an open and fair auction to maximize value for both MTRM common and preferred shareholders. Succumbing to shareholder and legal pressure, you and the Board were ultimately forced to concede that the value of $300 million, assigned to Company's full-basket of assets, was woefully inadequate. Indeed, that the $300 million value was inadequate is evidenced by the subsequent definitive agreement to sell your least attractive asset -- PeterStar -- for $215 million; this is approximately 70 percent of the value you had previously arbitrarily assigned to all of the Company's assets. These events demonstrate conclusively that you and the Board inadequately investigated the Company's actual value.
We are further outraged that despite all of this, the Board awarded you a $6 million bonus. This sum is both unreasonable and wholly unjustified given how poorly you have discharged your fiduciary duties to date.
Despite the foregoing, our paramount concern now surrounds the sale of the Company's most prized and valuable asset -- Magticom -- a company with growing cash flows and a rich balance sheet. Based on an analysis of recent transactions in Eastern Europe, our own internal research leads us to conclude that Magticom, as a stand-alone asset, could be worth approximately $1 billion. Since the expiration of the exclusivity period on February 14, 2005, you have made no public statements concerning your efforts to maximize the value of Magticom.
Furthermore, we are concerned that you and the Board may have rebuffed various suitors who were interested in purchasing the asset after the expiration of the exclusivity period.
We demand that you and the Board immediately commence a fair and open auction for the sale of Magticom so that shareholder value may be maximized. Any other result would constitute a further violation of the duty you owe both shareholders and the Company. Govern yourself accordingly.
Joseph S. Criscione
Managing Member
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Source: Esopus Creek Capital, LLC |
