| AsianDivaGirlsWebDude |
12-30-2008 04:00 AM |
Does anyone one know what iBill, Penthouse, and AFF (aka Adult Friend Finder, Friend Finders Network, stock symbol FFN), have in common?
A small caveat for any would be investors:
Quote:
FriendFinder Networks, owner of various online social networking sites such as AdultFriendFinder.com, Amigos.com, AsiaFriendFinder.com, Cams.com, FriendFinder.com, and BigChurch.com, filed for a $460 million IPO and intends to list on the New York Stock Exchange under the symbol "FFN."
The company is also publisher of Penthouse magazine. BigChurch.com is a Christian dating site.
FFN was formerly known as Penthouse Media Group but changed its name in July after purchasing FriendFinder for $500 million. Renaissance Capital seems to be the sole book manager on the offering.
FF produced 20% EBITDA margins (similar to CNET) on $244 million in revenues in the first 9 months of 2008. EBITDA was negative in 2007. FF has close to 1 million paying subs to the adult sites, paying an average of $19 per month, and 78K paying subs to the general sites, paying about $16 per month. The majority of revenue is derived from paid subscribers, however, 44% of revenue is derived from affiliate websites, posing a significant risk if competitors offer those affiliates better deals.
FFN has $446 million in debt, of which $411 million is classified as current, and $35 million in cash. The primary use of proceeds will be to pay down debt. Upon reading the S1, it appears that the company is in default on its debt due to failure to maintain covenants and needs the IPO cash to pay down that debt, else it will be forced to liquidate assets to meet the redemption. And according to the S1, its assets may not be sufficient to pay down the debt. So it looks like the primary impetus for the filing is to help them remain a going concern, so this should not be interpreted as a sign that the market for Internet IPOs is starting to recover.
From The S1:
?We do not currently have sufficient cash to repay this indebtedness if our debt is accelerated and if the noteholders instituted foreclosure proceedings against our assets, the proceeds of the assets could be insufficient to repay such indebtedness in full. Under these circumstances, we may be unable to continue operating as a going concern.?
"We have breached certain non-monetary covenants contained in agreements governing our 2005 Notes and 2006 Notes and our subsidiary, INI, has breached certain non-monetary covenants contained in its agreements governing the First Lien Senior Secured Notes, Second Lien Subordinated Secured Notes and Subordinated Convertible Notes. We cannot assure you that we will be able to cure such defaults or events of default, obtain waivers and consents, amend the covenants, and/or remain in compliance with these covenants in the future."
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On September 23, 2008, Fitch a financial rating company has downgraded Renaissance Capital's individual rating to D from C/D and changed the outlook on the bank's long-term issuer default rating to negative from stable. :warning
ADG |
