BV! Media Shareholder Group

September 17, 2010 17:06 ET

BV! Media Inc. Shareholders Request 60 Day Delay of September 29th, 2010 Special Shareholder Meeting to Allow for Another Bid

MONTREAL, QUEBEC--(Marketwire - Sept. 17, 2010) - A group of shareholders representing a significant portion of the investor base of BV! Media (the "BV! Media Shareholder Group") have sent a letter requesting that BV! Media Inc. delay the Special Shareholder meeting, slated for September 29th, 2010 by 60 days in order to explore alternative options. The BV! Media Shareholder Group is largely comprised of highly experienced investment industry professionals who have a long history as shareholders of BV! Media Inc. The BV! Media Shareholder Group has expressed their concerns to both BV! Media Inc. and Rogers Media Inc., and intend to address these concerns to the appropriate securities regulatory authorities governing BV! Media.

This request for an extension of the meeting date has become necessary after the publication of the circular of BV! Media where it is clearly indicated that no real attempt was made to take into consideration the possibility of other offers, and that no sale was announced or investment banker engaged to seek the best possible offer for the Company. In addition, it is clear to the BV! Media Shareholder Group that the key beneficiaries of the proposed transaction are members of management who have been in place for 22 months and acquired their stakes in the Company as a result of a transaction effected at a price below 15 cents at that time. 

The BV! Media Shareholder Group notes that only 3 days after the announcement of the effective sale of the Company to Rogers, the BV! Media announced record results for the previous quarter. These results were for the second quarter, traditionally not the strongest on a seasonal basis, and these showed 49% sales growth, which equates to record sales, and the largest revenue quarter the company has ever had in its history, as well as having announced a record quarter in terms of EBITDA, approaching the EBITDA for the entire previous year of 2009, which was reported at $1.2 million, and which itself was a record by a margin of over 100%. The Company by its own admission attributes this to the growth stemming from the market outside of its traditional market, in particular from English Canada and the launch of the Toronto office in February of this year. This new market is approximately three times the size of the Company's traditional market. The Company has only seen one quarter of impact from this new Toronto office and all logic would suggest this will not desist after simply one quarter.

All indications, including filings on SEDAR, underline that management never announced that the Company was for sale, nor does it appear that they took certain rudimentary steps to explore the possibilities in a comprehensive manner, and in a manner that would serve all stakeholders. Despite what can be categorized as a "standard" fairness opinion and related gestures, there is no explanation as to how the price of $24 million or 40 cents per share was derived.

The BV! Media Shareholder Group requesting the delay of the September 29th, 2010 Special Shareholder meeting have studied valuations for the Internet sector for some time and all indications are that this is a steep discount to fair current public market valuations; indeed, the current valuations for the sector are at a discount to historical valuations. Acquisitions are generally not made at a discount to market, in particular when the Company involved is the only strategically positioned Internet network of any significance that can be acquired in all of Canada. According to comScore December 2009 figures, BV! Media ranked 8th in Canada, in terms of audience size, and ranked 1st in French Canada (ahead of Google and others). It is worth underlining the entrance into the English language market is very recent.

Using current valuations as the basis, valuations in the United States (where the majority of public Internet companies can be found), for companies of similar quality, are in the range of 9-12X forward looking EBITDA. These U.S. companies operate in a more competitive market, generally have lower gross margins and lower EBITDA margins, and similar or lower growth, hence one could assume they should command lower multiples. Several private companies, positioned in a similar strategic bracket to BV! Media Inc. (top 15 participants) anticipate liquidity events or IPOs at 15X EBITDA. There are few public Canadian Internet companies and quality Internet companies in Canada have and continue to be valued at notable premiums to these valuations.

The objective of the BV! Media Shareholder Group in requesting a 60 day delay of the Special Shareholder meeting of September 29th, 2010 is simply to allow all stakeholders to be treated equitably, to allow for all serious and realistic options to be explored, and for management of BV! Media Inc. to fulfill its fiduciary responsibility.

The BV! Media Shareholder Group has retained the services of Newhouse Strategic Counsel Inc. a Montreal-based business law firm to address its concerns to management of BV! Media.

The BV! Media Shareholder Group is aware of outside interest in BV! Media Inc. and added time is required for this to bear fruit.

About BV! Media Shareholder Group.

BV! Media Shareholder Group is made up of shareholders who are also investors, whether by investing in the company directly or purchasing shares in the open market (close to 70% of the shares in BV! Media were granted at no cash cost, primarily to management). In aggregate, the BV! Media Shareholder Group represents a significant portion of investors. This group has been involved with the company since its beginnings and for over 10 years. Many in the group have backgrounds in the investment industry. In addition, the group played very proactive roles throughout and was responsible for some critical developments, including a transaction that solidified BV! Media Inc.'s ranking as the number one network in French Canada and transformed it into a credible national player. The BV! Media Shareholder Group has always been patient and constructive - driven by the desire to do what is in the best interest of all shareholders, which includes investors.

About BV! Media Inc.

BV! Media is a leading Canadian Internet advertising network, representing exclusively over 400 top-tier publishers with a combined reach of over 15 million unique visitors per month in Canada, and the publisher of the BRANCHEZ-VOUS! news and information portal.

BV! Media is listed on the TSX Venture Exchange under the symbol BVM and has approximately 60.5 million shares outstanding. Additional information on the Corporation can be obtained on SEDAR and at www.bvmedia.ca.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release. The contents of this release are the sole responsibility of the BV! Media Shareholders Group.

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