Penthouse Owner Delays Playboy Bid, Says Offer `Forthcoming'
FriendFinder Networks Inc., the owner of Penthouse magazine, delayed its bid for Playboy Enterprises Inc. a second time since Playboy founder Hugh Hefner’s $123 million offer to take the company private.
An “offer is forthcoming,” FriendFinder Chief Executive Officer Marc Bell said yesterday in an interview. He declined to say when his closely held company will bid for Playboy, after originally saying an offer might come July 12 and later pushing that back to yesterday.
FriendFinder’s bid is taking longer than Bell expected because his “lawyers are taking their time,” he said.
Hefner, with partner Rizvi Traverse Management LLC, plans to offer $5.50 apiece for Playboy’s Class A and Class B shares, Playboy disclosed July 12. The offer, which exceeds either class’s July 9 closing price by more than 30 percent, values Chicago-based Playboy at about $185 million.
The 84-year-old founder of Playboy already owns 69.5 percent of the Class A voting stock and 27.7 percent of the Class B non-voting stock. In a posting on Twitter, Hefner responded to the potential competing bid from FriendFinder.
“Penthouse really isn’t in the picture,” Hefner said. “I’m buying, not selling.”
In response to Hefner’s bid, other Playboy shareholders filed a complaint in Delaware Chancery Court in Wilmington, Delaware.
“The going-private Plan is the product of a flawed process designed to sell PEI to Hefner and Rizvi Traverse on terms detrimental” to stockholders of Playboy, Carmella P. Keener, the lawyer representing shareholders, said in the complaint.
FriendFinder, based in Boca Raton, Florida, operates adult- themed websites such as AdultFriendFinder.com and Cams.com. The company this year postponed an initial public offering that was planned to raise as much as $240 million, according to a U.S. Securities & 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.
Bell said that about half of FriendFinder’s debt is held by insiders and the company would have no problem financing a purchase of Playboy.
“Financing is not an issue for us,” Bell said. “There’s no debt issue.”
Playboy Class B shares fell 18 cents to $5.37 yesterday on the New York Stock Exchange, following a 41 percent jump on July 12. The Class A shares declined 12 cents to $5.42 yesterday and gained 36 percent on July 12.