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Wednesday, August 30, 2006

New Frontier's Proposed Buyout of the Adult Entertainment Company

New Frontiers Media (NOOF), a company specializing in adult entertainment movie distribution to hotels that operates as 'The Erotic Network', may actually be acquired by a private investment group. In a SEC Filing yesterday the company disclosed that Warren Lichtenstein of Steel Partners II LP told its board of directors on August 15 that it was interested in leading a management buyout of the company. The terms are for an undosclosed premium and the company has yet to receive any additional information about the potential offer.

Steel Partners started acquiring shares last summer and now owns about 3.2 million shares as of July. Since the August 15 meeting, shares were only up about 1.2% as of yesterday's close.

An analyst at Merriman Curhan who rates the stock as a Buy updated notes to clients saying this stock could be aggressively purchased up to $10.00. The 52-week high is $9.38 and the low is $5.40. Overthe last 5-years this stock has only briefly traded above $10.00 before selling back off.

Steel Partners II LP has a history of doing buyouts. It has been involved with Icahn on KT&G (which failed), involved in the Fox & Hound buyout, involved in Stratos and the Angelica deals, Bairnco and others.

If New Frontiers is to be acquired the buyout would likely have to be on friendly terms because the company has means to thwart unwanted buyouts that are not deemed of value or not deemed as serious.

Jon C. Ogg
August 30, 2006

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