Playboy Suitor FriendFinder Networks Raises $551 Million in Debt Financing

FriendFinder Networks Inc., the Penthouse magazine publisher vying to acquire Playboy Enterprises Inc., has completed a $551 million debt financing, the company said today in a statement.

FriendFinder, which operates adult-themed websites, had planned to issue $296 million of senior secured bonds due in 2013 to recapitalize, simplify its capital structure and extend maturities, Standard & Poor’s said this month.

The company, based in Boca Raton, Florida, said in July that it would bid $210 million for Playboy, a 14 percent premium to the $5.50-a-share offer that founder Hugh M. Hefner made days earlier for the Class A and Class B shares he doesn’t own. In August, Playboy formed a board panel to evaluate Hefner’s bid, which values the company at $185 million.

Hefner, 84, controls 70 percent of Chicago-based Playboy’s Class A voting stock and 28 percent of the Class B non-voting stock. He said on July 13 that he isn’t interested in selling his stake or talking with a financial sponsor other than his partner Rizvi Traverse Management LLC.

FriendFinder Chief Executive Officer Marc Bell said in a letter to the Playboy board at the time of his bid that FriendFinder had contacted lenders to back the acquisition though it hadn’t secured financing.

FriendFinder this year postponed an initial public offering that was planned to raise as much as $240 million, according to a U.S. Securities and Exchange Commission regulatory filing. The company was selling a 49 percent stake and said it would use the proceeds to pay down debt.

The company lost money in 2006, 2007, 2008 and for the first nine months of 2009, according to the SEC filings. It had $409.5 million in long-term debt as of Sept. 30, 2009, the most recent figures available because the offering was delayed.

Playboy’s Class B shares fell 1 cent to $5.03 yesterday in New York Stock Exchange composite trading. They have gained 57 percent this year.

To contact the reporters on this story: Anthony Palazzo in Los Angeles at apalazzo@bloomberg.net; Matthew Campbell in Paris at mcampbell39@bloomberg.net.

To contact the editor responsible for this story: Peter Elstrom at pelstrom@bloomberg.net

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