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.