Penthouse magazine owner files for bankruptcy
SUNNYVALE, Calif. • FriendFinder Networks Inc., the owner of Penthouse magazine and a bevy of online dating and adult websites, filed for Chapter 11 bankruptcy protection Tuesday.
The Sunnyvale, Calif., company said that bankruptcy protection is the "most efficient and cost-effective" way for it to improve its balance sheet.
FriendFinder, like many of its peers in the adult entertainment industry, has been struggling for some time with lower revenue, as free adult content online has lessened demand for paid content. It also faces tough competition for its online dating sites. The company reported a loss of $49.4 million in its last fiscal year.
The company owns well-known Penthouse magazine and related products, but it also runs a bevy of online dating sites such as Friendfinder, Seniorfriendfinder and Bigchurch.
Additionally, it runs a number adult websites such as Getiton, Nostringsattached and Hotbox. About 29 percent of its revenue last year was from its "live interactive" segment.
FriendFinder was created after Penthouse Media Group acquired Various Inc. in 2007. The company then changed its name and it went public in 2011.
The company, which had $521.8 million in outstanding debt at the end of its March quarter, said that it plans to refinance some of its debt through an agreement with the majority of its note holders. This would ultimately return control of the company to founders of Various Inc., Andrew Conru and Lars Mapstead.
Under the agreement, note holders would exchange existing notes for a mix of new notes, cash and new common stock.
FriendFinder CEO Anthony Previte said the agreement with the majority of its note holders will allow the company to refinance long-term debt, reinvest in the business and position some of its strongest brands for additional growth.
The plan is expected to reduce the Company's annual interest expense by over $50 million and eliminate approximately $300 million of secured debt.
The company has already filed initial bankruptcy paperwork and plans to file a plan of reorganization this month.
FriendFinder's stock was delisted from the Nasdaq in August for failing to trade above $1 and moved to the over-the-counter marketplace. Its shares plunged 79 percent to 7 cents at midday in high-volume trading.