FriendFinder Not Likely To Find Pals On Wall Street

CNET NEWS -- Dec 24 -- Friend Finder Networks, the company formerly known as Penthouse Media Group, is filing an IPO (underwritten by Renaissance Capital, based in Moscow) to pay off almost a half a billion in debt, to stay alive. The $460m IPO will go to paying off FriendFinder's ~$450m debt. For the nine months ending September 30, FriendFinder had revenue of $243m, operating income of $17.6m and a net loss of $32.3m. In its prospectus:

Our ability to continue as a going concern is dependent on our ability to raise additional capital, including from this offering. As of September 30, 2008, our balance sheet had...$420m in short-term debt... $411m of which had been reclassified from long-term debt, due to our failure to comply with certain covenants and restrictions in the agreements governing our 2005 Notes and 2006 Notes... 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.

FriendFinder averaged 1 million paying subscribers a month for the first nine months of September 30 good for 77% of Internet revenue. Net revenue per subscriber was $19.06 a month. The monthly churn rate is 18% for the nine months ending September 30, down from 19.6% at the end of 2007.

Various neglected to collect taxes in the EU. The company says:
After our acquisition of Various, we became aware that Various and its subsidiaries had not collected VAT from subscribers in the European Union nor had Various remitted VAT to the tax jurisdictions requiring it. We have since registered with the tax authorities of the applicable jurisdictions and have begun collecting VAT from our subscribers in the European Union and remitting it as required.

The full article was originally published at CNet News, but is no longer available.

Mark Brooks: The IPO is underwritten by Renaissance Capital a Moscow based investment bank. Huh? On the other hand, adult site membership is up, user churn is down, and ARPU is $19.31 a month. Your comments please.

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Comments

[Ross Williams]

HOW CAN ADULT DATING MAKE A LOSS!??!

Fling.com must be hitting them even harder than most people thought.

The casual dating market is huge - it converts the best, retains members for the longest and has the largest market - their target market is basically people that like sex, a rather considerable demographic!!

This is a huge opportunity for FriendFinder's competitors - if they're struggling and need to reign in their marketing budget then it'll make it much easier for other casual sites to pick up traffic,

Ross

[Richard]

The loss is attributable to the interest on the rather large debt on their books (which is how they financed the buyout last year).

The operating profit was ~17 million.

[Ghassan (Dating tips for men)]

I think the debt is from the amount of money Caligua lost in the theater way back when, and are using FriendFinder as a way to not make it seem so.

I mean, Bob Guccione is like a dirty Hugh Hefner.