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Sportsman Channel, IMO, Outdoor Channel merge

It was announced this morning that Outdoor Channel Holdings, Inc. has approved a merger agreement with InterMedia Outdoors, Inc., and The Sportsman Channel, forming a new holding company called InterMedia Outdoors Holdings, LLC. It should be noted that InterMedia Outdoors is the parent company of BassFan.com.

Here is the press release outlining the basics of the merger.

TEMECULA, Calif. – November 16, 2012 – Outdoor Channel Holdings, Inc. (NASDAQ: OUTD) today announced that its board of directors unanimously approved a definitive merger agreement with InterMedia Outdoors Holdings, LLC (“IMOH LLC”) which in turn controls The Sportsman Channel, a national cable television network for outdoor enthusiasts, and InterMedia Outdoors, Inc., a multi-media company that publishes 15 market leading outdoor magazines, 20 leading websites and is a leading television producer in the category. IMOH LLC is controlled by InterMedia Partners VII, L.P., a private equity investment fund.

This merger will create InterMedia Outdoor Holdings, Inc. (“IMOH Inc.”), the premier media and content company serving the large and growing market of outdoor enthusiasts in the United States. This transaction unites the industry leaders in outdoor television, print, digital and social media, as well as editorial and content production for the hunting, shooting, fishing and conservation categories. The combination will enable IMOH Inc. to serve the vast and growing consumer base of outdoor enthusiasts across all media while providing an unparalleled multimedia platform for distributors, producers and advertisers to connect with one of the country’s largest vertical lifestyle markets.

Tom Hornish, President and CEO of Outdoor Channel Holdings (the “Company”), commented: “This is a logical and highly complementary transaction that creates an exceptional multimedia organization optimally positioned to serve the huge and growing outdoor lifestyle category. Combining the resources of these three companies will allow us to better serve the consumers, distributors and advertisers in this robust marketplace. We will have the highest quality content, the top brands and the greatest reach. In turn, we also strengthen our ability to invest in our assets, expand our distribution and drive further returns for our shareholders.”

Jeff Paro, CEO of InterMedia Outdoors, Inc. stated, “This is the culmination of a long and dedicated effort by our team to build a truly multimedia enterprise. IMOH Inc. will serve all of its consumers in all media across all platforms. National and endemic advertisers will have unprecedented opportunities to reach our very large and attractive consumer base.”

Gavin Harvey, CEO of The Sportsman Channel, said “We built Sportsman from a small cable network five years ago into one of the preeminent brands in the outdoor space. I am excited by what we have achieved and even more excited about the prospects for the combined company. The marriage of two cable networks with the reach and brands of InterMedia Outdoors is a truly unique proposition in the cable media landscape.”

Following the close of the transaction, Tom Hornish and Tom Allen, the Company’s CFO/COO, will be CEO and CFO/COO of IMOH Inc., respectively. Gavin Harvey will be President, Television Networks and Jeff Paro will be President, Publishing, Integrated Media and Branded Content.

InterMedia Partners VII, L.P. and the minority members of IMOH LLC will own 67.6% of IMOH Inc. and InterMedia Partners VII, L.P. will become the majority shareholder of IMOH Inc. Peter Kern, Managing Partner of InterMedia Partners VII, L.P., who will become Executive Chairman of the Board of IMOH Inc., said, “We are tremendously excited about the combination of these businesses and the opportunity it presents to build awareness and value for this media segment. With two cable networks each reaching over 30 million homes, 20 branded websites, and over 23 million monthly readers, we are in a unique position to grow this category and deliver greater value to all our constituencies.”

The transaction will take the form of a cash and stock election merger in which the Company’s stockholders will be entitled to receive for each share, subject to proration, either $8.00 in cash or one share of stock in IMOH Inc. An aggregate of $115 million will be available for the Company’s stockholders electing cash such that, as result of the transaction, the stockholders of the Company are expected to own approximately 32.4% of IMOH Inc. In connection with the transaction, the Company’s board has also approved a 25 cent per share special dividend which will be paid on or about December 7, 2012 to stockholders of record as of the close of business on November 27, 2012. The Company expects that IMOH Inc. will be listed for trading on NASDAQ.
IMOH LLC has secured a $150 million fully committed financing from CIT Communications, Media & Entertainment to finance a portion of the merger consideration and to refinance the outstanding debt of InterMedia Outdoors, Inc.

The transaction, which is expected to be completed in the first quarter of 2013, is subject to the satisfaction of customary closing conditions, including the registration statement on Form S-4 being declared effective by the Securities and Exchange Commission, receipt of requisite regulatory approvals, approval from the Company’s stockholders with respect to the merger and other customary closing conditions. The Company’s largest stockholders, Perry T. Massie, Thomas H. Massie and their affiliated entities and each of the Company’s directors and executive officers, together whom currently represent a combined ownership of approximately 41% of the Company, each have agreed to vote in favor of the transaction.

Lazard is serving as exclusive financial advisor to the Company in connection with the transaction. Wilson Sonsini Goodrich & Rosati, P.C. is legal advisor to the Company in connection with the transaction. Paul, Weiss, Rifkind, Wharton & Garrison LLP is legal advisor to IMOH LLC in connection with the transaction.

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