FriendFinder Networks takes Playboy Enterprises under its control

Playboy Enterprises changes its owner

In brief: FriendFinder Networks has made shareholders Playboy Enterprises more generous offer than the recent offer of Hugh Hefner

The FriendFinder Networks has made shareholders Playboy Enterprises more generous offer than the recent offer of Hugh Hefner, the founder of Playboy. FriendFinder Networks, owner of the magazine Penthouse, willing to pay for the entire share capital of Playboy Enterprises $ 210 million this way, potential buyers evaluate a company by 13,5% more than its controlling shareholder Hugh Hefner, recently offered the minority shareholders to sell their shares (as voice, and not voting) for $ 5.5 per share, representing $ 185 million for the entire capital of the corporation.

Offer FriendFinder Networks undoubtedly addressed primarily to the very Hugh Hefner. To date, he will remind owns more than 69,5% of voting shares (a total of issued 4,864,000) and 27.7% non-voting (in circulation 28,632,000). Without his consent, in my opinion, the proposal FriendFinder Networks opens a new stage of confrontation between Hefner and minority shareholders, namely, the corporate war with the owners of Penthouse. Note that if the founder of Playboy refuses to sell its stake FriendFinder Networks, then it will be a very difficult situation. Hefner will have to take the company into profit this year (after two years of net losses), otherwise, the dividends paid on non-voting shares will not be assessed and, I fear, in this case they will be eligible to vote. Given the fact that minority shareholders will no doubt suffer the action to a more generous offer from the owners of Penthouse, consolidate the past two-thirds of total equity. In case of refusal to charge dividends on non-voting securities, it will give them the edge on the board of directors, the right to appoint management and to determine the strategy of the corporation. Hefner, of course, can attract loans for the payment of dividends on the “preferred shares” (so they do not become the voice), but this is unlikely. Management accountability for Playboy in 2009 expressed doubts that he could repay the current lines of credit in May 2012. Most likely, the company will insist on the prolongation of the loan at a higher interest rate. So Hefner has much to ponder. Or sell its stake in Playboy Enterprises for $ 71 million, after which he will be left in the company as chief editor, or to enter into confrontation with FriendFinder Networks. In this case, he risks losing operational control over the corporation and become bogged down in corporate conflicts that the age of 84 years rather uncomfortable.

Olga Bespalova
2010-07-18 17:03, Commodities.

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