FriendFinder ipo coming soon.

[Love Sex]

street insider
What do you think?

[WiredGuy]

T-6 days and counting...
WG

[epitome]

shhhhh, it's the quiet period!

[HandballJim]

yeah I got the email with the prospectus...

[NaughtyRob]

As we all bitch and complain about the demise of adult, another adult company is having an ipo.

[AsianDivaGirlsWebDude]

Friend Finder Network (FFN) aka Adult Friend Finder has made nice money for some people who still rah-rah it, while operating at a huge loss, and worse still they helped enable many companies which have hurt the adult biz over the past several years (think Zango, illegal tube sites, etc).

If I recall correctly there was also possibly some sort of murky connection between the people behind Penthouse and the people at iBill who cost numerous webmasters (including myself) collectively tens of millions of dollars.

The customer complaints against AFF and their associated companies are notorious on such consumer boards as the Rip-Off Report etc.

Here is an interesting story about the FFN IPO reported today in a Financial Journal, a sort of caveat emptor for anyone considering to invest in this very risky company:

Initial Penthouse Offering, Take Two: Go Public or Go Bust

FriendFinder Network needs money ... fast. But, this is nothing new. The weight of hundreds of millions of dollars of short-term debt and no way to repay it has prompted the company formerly known as Penthouse Media Group to turn to the public capital markets for the help it needs. It's a desperate move, as FFN learned a year ago when it made the same announcement under the same circumstances. Likely, the results will be the same as well. FFN didn't go public last year, and 2010 probably won't be any different.

Same Ol' Situation

"It's the same old situation ... It's the same old ball and chain."

The Mötley Crüe lyrics pumped into gentlemen's clubs around the U.S., inspiring dancers to peel away their skin-tight togs to the delight of dollar bill-wielding bachelor partiers, offer an apt description of this latest attempt by FFN to go public.

FFN, which is not profitable, has a mere $32 million in cash on hand and $650 million in liabilities, according to Crain's New York. Of that, $44.5 million comes due on July 31, 2010, and the company is already saying that it will run into a "material deficiency in our short-term liquidity" if it can't restructure. To make matters worse, the company has a negative net worth of $118 million. It's not a pretty picture for investors, which makes it appear that this strategy probably won't work.

When I saw the financials and the IPO plans, I thought I was looking at news that was a year old; it wasn't until I saw the liability amount that I realized this was a fresh attempt (Warning: NSFW).

Almost exactly a year ago, Penthouse changed its name to FFN and announced that it was looking for equity capital. At the time, the company had $691 million in liabilities, according to the S-1 it had filed in December 2008, $411 million of which had been reclassified from long-term to short-term because of the company's "failure to comply with certain covenants and restrictions in the agreements governing our 2005 Notes and 2006 Notes and our subsidiary's First Lien Senior Secured Notes, Second Lien Subordinated Secured Notes and Subordinated Convertible Notes and for which waivers had not been obtained."

This left FFN with $420.1 million that was due immediately and only $43.3 million in cash on hand. The company sought to go public in an attempt to remedy its incredible short-term debt load and lack of access to the resources to repay. Even the $59 million in interest payments that FFN had paid in the first nine months of 2008 were intimidating when weighed against the small amount of cash the company had on hand.

Of course, FFN didn't go public -- but you probably figured that out already. The notion of floating an IPO on the New York Stock Exchange at this time last year was nothing short of absurd, especially for a company in FFN's situation.

But it seems that over the past 12 months, FFN found a way to buy time; otherwise it wouldn't be in its current situation -- it would have just gone out of business. Instead, a year has passed, and nothing has changed: It's still around, it's still in financial trouble, and it's now ready to attempt the identical maneuver it failed at last winter in the hopes of attaining a different outcome.

Same Ol' Ball and Chain

The chain on FFN's ankle in 2010 is the same one that Penthouse bore over a year ago. In 2007, Penthouse acquired Various. You've probably never heard of Various, but its portfolio companies are rather well known: FriendFinder.com, AdultFriendFinder.com and countless other dating sites, both mainstream and adult. The deal was mind-blowing: Penthouse, which had estimated annual revenues of only $50 million, spent $401 million on Various.

Feelings about the deal in the adult entertainment industry were mixed. Many were optimistic, hoping that the acquisition would signal an opportunity for the industry to break into mainstream finance, showing a maturity that long eluded the skin business. But the zeal was tempered with concern: Nobody could figure out the transaction.

Penthouse was universally judged to have overpaid for Various, and the dollars involved left people perplexed. It was clear that outside capital had been pumped into Penthouse to make the acquisition possible, but there didn't seem to be much value to the approach beyond the opacity afforded by the ailing adult media company.

Skeptics were right; the acquisition didn't make any sense. True, Penthouse did need to beef up its online presence, where it was virtually nonexistent in 2007, and buying Various was a great way to do that. Also, its revenues were in the tank, and Penthouse CEO Marc Bell and his investors obviously needed a way to turn the situation around. Leverage was easy to secure at the time, so pumping more money into Penthouse so it could buy its way out of trouble by acquiring Various probably didn't seem too crazy when the transaction occurred.

For a while, the acquisition was celebrated, because Bell could easily control the flow of information from his private conglomerate. But the situation eventually deteriorated to the point where honesty was the only viable policy. The heavily leveraged transaction had left Bell and his investors with interest payments that were bleeding the company dry, and the damage done to credit markets and consumers by the September 2008 financial meltdown took the Penthouse's future from implausible to impossible.

By the end of 2008, there was no hope for Penthouse. It had blown through its loan covenants and needed to come up with more than $400 million on short notice. Credit markets were no longer an option, and FFN's existing investors were ostensibly unwilling to double down on the company. The only choice it had was to go public. So Penthouse changed its name, drawing on the brand value of the most popular company in the Various portfolio, while also downplaying the adult entertainment aspect of the company's operation in hopes of making potential investors more comfortable.

It didn't work. FFN was unable to make the plunge, but it found a way to limp along for the year that followed.

FFN's latest attempt to go public is a transparent gamble. In addition to the attempt to push through a short-term credit debacle with an equity issue, it's trying to go public on the NYSE, despite the fact that it doesn't meet the criteria yet.

According to a report in Crain's New York, a company must have a minimum of $75 million on hand, a market value of $150 million and $50 million in shareholder equity to join the NYSE party. If FFN is able to raise the $200 million it's shooting for, reaching those minimums would be no problem. But that would require a successful IPO, which is far from assured.

It's 2010, and it's really just the same ol' situation for this ailing company.

ADG

[CPimp]

Seems pretty interesting...

[shimmy2]

hit n run within the first few hrs on ipo day, set stop loss and a trailing stop? i'm just guessing i only fooled with forex before doing news spike trading so pay me no attention its 1am

[AsianDivaGirlsWebDude]

I just heard that FFN (Adult Friend Finder, Penthouse, et al) is launching a new tube site filled with full length scenes to coincide with it's IPO offering.

Gee, what a huge surprise, as if they haven't sold out the adult biz enough already.

Check out these Alexa stats:



I keep a pretty good eye on the Tube sites, and I have never heard of their site, yet it suddenly explodes with traffic upon launching a few months ago, but then inexplicably takes a huge dive a few months later (perhaps when the first traffic buy ended?).

Could it be that they bought a ton of traffic to artificially inflate the site's Alexa ranking?

It's trending upwards suddenly again, perhaps due to another traffic buy?

Of course, their own tube site is loaded with ads for FFN related sites, including a pop-up ad which covers their 2257 notice (which is not in compliance with the 2257 regulations in any case).

I actually watched (as painful as it was) the FFN 24 minute "roadshow" presentation promoting the FFN IPO.

What a joke. All three of the presenters, Staton, Bell, and Shashoua, were awful, particularly Marc Bell, who kept stuttering, stumbling, and coughing throughout his terrible presentation.

Since it appears from their stilted speaking that they were reading from a script/notes, I have no idea how a non-profitable company that aspires to greatness, could produce such a piece of garbage.

Their presentation was nothing but snake oil in my opinion, since they did not honestly tell the viewers that they are not now profitable, have not been profitable for years, and that unless they can con people into buying stock in an unprofitable company, they will very possibly soon be out of business.

Quite frankly they looked like very desperate men, and not corporate leaders that might inspire confidence in investors.

I honestly thought they would come up with something polished, but if I were a prospective investor in FFN, the 3 Stooges speaking on behalf of the IPO would surely make me want to put away my wallet right away...



ADG

[PXN]

People, do yourself a favor and stay away from this IPO.

[AsianDivaGirlsWebDude]

Originally Posted by PXN

People, do yourself a favor and stay away from this IPO.

You think?

From the AP wire:

Sex may sell, but investors may not be ready for an IPO this hardcore.

Penthouse magazine publisher FriendFinder Networks Inc., which operates adult entertainment and networking Web sites like Bondage.com, AdultFriendFinder.com and HotBox.com, hopes to raise $220 million in an initial public offering this week. Analysts say the IPO could serve as a litmus test for the emerging social networking sector, but aren't sure how investors will receive its racy content and weak balance sheet.

"It's hot, but not in the IPO sense," said Francis Gaskins of IPOdesktop.com, noting that the adult subscriber base is decreasing. Recently, sales have been flat and the company has had difficulty servicing its heavy debt load.

FriendFinder, which changed its name from Penthouse Media Group in 2007, will sell 20 million shares. The stock is expected to price between $10 and $12.

Paid-usage pornography, personal ads and other graphic content make up about 70 percent of revenue for the Boca Raton, Fla. company, which emerged from a bankruptcy in 2004. Its most popular site is AdultFriendFinder.com, a forum for people with a variety of sexual interests, and those looking for an immediate tryst.

The other 30 percent comes from what it calls "general audience" social networking sites that include Amigos.com, SeniorFriendFinder.com and BigChurch.com, which is designed to bring "people together in love and faith."

Because the market has eagerly been anticipating debuts of social networking sites Facebook and MySpace; micro-blogging site Twitter; and business networking site LinkedIn, investors may pay close attention to how FriendFinder fares, said David Menlow, who runs IPO research firm IPOfinancial.

There aren't many comparable social networking IPOs. In 2004, PlanetOut Inc. made a market debut under the ticker LGBT ? also the acronym referring collectively to lesbian, gay, bisexual and transgender people. The company's shares plummeted, however, from the $9 offering price to 38 cents before being acquired in June by media company Here Networks LLC.

"This is very reminiscent of the early days for Internet platform companies," Menlow said. "It's a very bold move to come into the market on the beginnings of a social networking focus by IPO investors. But it's a new arena, and certainly the ubiquitous nature of these types of sites could lead people to think they've found the next hot sector."

Still, investors may be uneasy about FriendFinder's financials, analysts said. Sales have been flat, though revenue edged up on an increase in prices for its 1 million paying subscribers. The company said in a regulatory filing that net revenue was $244.4 million in the nine months ended Sept. 30, compared with $243.9 million in the same period a year ago.

Meanwhile, the company is paying a heavy $75 million in interest on operating profit of $45 million, and is carrying a debt load of $471 million. FriendFinder said in a regulatory filing that proceeds from the offering would be used to repay debt.

"I think this is a case of going public or going broke," Gaskins said. "They're just too leveraged to stay afloat."

ADG

[Mutt]

they vastly overpaid for Various and will never be able to pay the two douchebags, Lard and Cornhole, they bought it from. what should happen is that those two get Various back and then sell it for what it was really worth or go back to running it themselves which i'm sure they want no part of. Penthouse was dead when Marc Bell bought it, it's dead now minus the Various stuff.

[AsianDivaGirlsWebDude]

Originally Posted by Mutt

they vastly overpaid for Various and will never be able to pay the two douchebags, Lard and Cornhole, they bought it from. what should happen is that those two get Various back and then sell it for what it was really worth or go back to running it themselves which i'm sure they want no part of. Penthouse was dead when Marc Bell bought it, it's dead now minus the Various stuff.

Many may not know it, but in the early days of the net, Legendary Lardass ran a Napster-like music piracy web site, for which he was sued about and lost, but Lars Mapstead never learned his lesson.

It appears to me his whole approach to business has always been to bend the rules and sucker people at every opportunity. Still, despite his best efforts, Lars and Andrew Conru ultimately could not build a profitable business upon their house of cards, although they sucked plenty of money out of the business to enrich themselves personally - after all, that's the first rule of thieves according to people knowledgeable about the subject, as I understand it.

Therefore, those two were the perfect match for the even more predatory likes of Marc Bell and company (Marc comes off to me as the quintessential snake oil salesman).

Lars and Andrew sold out, and the shell game was on, big time (Penthouse paying money they did not have, for an overvalued company - this is the stuff fictional money-laundering/RICO/ponzi scheme type novels are written about).

Someone from the SEC/DOJ really should investigate the whole iBill, Penthouse Media Group, Various connection - many things do not seem quite right about any of them, at least imho...

ADG

[Dirty Lord]

counting the days

[AsianDivaGirlsWebDude]

Originally Posted by Dirty Lord

counting the days

Sounds like the Wall Street Journal is ready to count FFN out:

A name change, not making any money, a lot of debt: If that description sounds like a recipe for a dicey online date, then investors might want to apply the same principles to the coming week's IPO of Web-site operator FriendFinder Networks Inc.

FriendFinder, which operates more than a dozen Web sites aimed primarily at people looking for relationships or flings, changed its name 18 months ago from Penthouse Media Group. It isn't profitable, and until recently was in default on its debt covenants.

ADG

[the real magoo]

Why did they change the name anway? Penthouse is a pretty strong brandname, no?

[slapass]

How could AFF not be profitable?

[wild johnny]

Originally Posted by slapass

How could AFF not be profitable?

Some of the entries I read above say they basically paid way too much for the friend finder network. And done so with borrowed money. The payments on those loans are crippling them..

This is not an IPO that I would be laying down $$ for..

[Slappin Fish]

Originally Posted by slapass

How could AFF not be profitable?

They make money. Problem is Penthouse (rebranding itself Friend Finders Networks) over leveraged themselves to buy aff. Servicing that debt is what is killing them...

[SykkBoy]

some does this mean a short position on this stock is a good thing? ;-)

[DatingGold]

It's only paper. Gotta cash out somehow.

[IllTestYourGirls]

Originally Posted by SykkBoy2

some does this mean a short position on this stock is a good thing? ;-)

pump and dump baby lol

[andrej_NDC]

I can't wait for the idiots to be out of business.

[AsianDivaGirlsWebDude]

Originally Posted by slapass

How could AFF not be profitable?

Originally Posted by Slappin Fish

They make money. Problem is Penthouse (rebranding itself Friend Finders Networks) over leveraged themselves to buy aff. Servicing that debt is what is killing them...

You really should not invest if you don't bother to do any research - Various, Inc, the company which owned AFF, and was purchased by the Penthouse Media Group, had been losing tens of millions a year, in the years prior to the sell.

While their was and is, lots of income, it was not a profitable business in recent years, and it is still not profitable.

From the FFN Prospectus (click on the link to see the entire FFN Prospectus):

We have historically generated significant net losses. As of September 30, 2009, we had an accumulated deficit of approximately $173.6 million. For the nine months ended September 30, 2009, we had a net loss of $27.4 million. For the years ended December 31, 2008, 2007 and 2006, we had net losses of approximately $46.0 million, $29.9 million and $49.9 million, respectively.

From another financial journal today:

​Aren't investors supposed to be ruthless believers in the shallowness and depravity of the human race? That seems to be the bet that FriendFinder Networks was making when the Boca Raton-based website promoter decided to stage an initial public offering. The pitch: This could feed the human sex drive in the same way that Facebook feeds human vanity. It already has a million subscribers.

Yet investment analysts are lukewarm about the company's chances. It's not just that they think investors are bashful about investing in porn; they say there's skepticism over whether the company, which changed its name from Penthouse Media Group in 2007, has made enough progress building profit in the the years since a bankruptcy filing.

ADG

[ztik]

Don't think ill be getting in the IPO but wait fo ropen and see if it tanks or not

[AsianDivaGirlsWebDude]

Originally Posted by ztik

Don't think ill be getting in the IPO but wait for open and see if it tanks or not

Might be a wise choice...

Here is what a reporter for the Wall Street Journal wrote:

A name change, not making any money, a lot of debt: If that description sounds like a recipe for a dicey online date, then investors might want to apply the same principles to the coming week?s IPO of Web-site operator FriendFinder Networks Inc.

FriendFinder, which operates more than a dozen Web sites aimed primarily at people looking for relationships or flings, changed its name 18 months ago from Penthouse Media Group. It isn?t profitable, and until recently was in default on its debt covenants.

It struck a deal in October with its creditors to waive its defaults in exchange for all the money it raises in its initial public offering.

Buyer beware...

ADG

[Angry Jew Cat - Banned for Life]

Originally Posted by the real magoo

Why did they change the name anway? Penthouse is a pretty strong brandname, no?

so when shit goes bust as fuck the headlines aren't screaming "penthouse fails!"?

[AsianDivaGirlsWebDude]

Originally Posted by the real magoo

Why did they change the name anway? Penthouse is a pretty strong brandname, no?

Originally Posted by Angry Jew Cat

so when shit goes bust as fuck the headlines aren't screaming "penthouse fails!"?

Friend Finder sounds a lot more innocuous than Penthouse, and might be easier to explain if it shows up in someone's portfolio ("Oh my, I thought it was a social networking site, I had no idea that I invested in a company whose profits are primarily derived from porn related activities"), LOL...

ADG

[Pleasurepays]

would be a HORRIBLE investment in my opinion... unless youre such a newb that you think cams.com is going to grow or adultfriendfinder is going to grow consistently, year after year. their best days are far behind them. otherwise, you're betting that they will come up with something brilliant... and they haven't done anything unique yet... other than support every shady operation online.

[Slappin Fish]

Originally Posted by AsianDivaGirlsWebDude

Various, Inc, the company which owned AFF, and was purchased by the Penthouse Media Group, had been losing tens of millions a year, in the years prior to the sell.

While their was and is, lots of income, it was not a profitable business in recent years, and it is still not profitable.

From the FFN Prospectus (click on the link to see the entire FFN Prospectus):

We have historically generated significant net losses. As of September 30, 2009, we had an accumulated deficit of approximately $173.6 million. For the nine months ended September 30, 2009, we had a net loss of $27.4 million. For the years ended December 31, 2008, 2007 and 2006, we had net losses of approximately $46.0 million, $29.9 million and $49.9 million, respectively.

From another financial journal today:



ADG

For fuck sakes stop lecturing everybody when you don't understand shit. Honestly.

These are PENTHOUSE (FFN) losses not Various Inc's. Various Inc was a private company and at such did not release its earnings.

What we know from the S-1 filling is that since acquiring Various Inc FFN's operating profits are $45 million (AFF profits likely higher since Penthouse mag will be losing money) but they swing to a net loss chocking on the interest payments of $75 million on the debt incurred buying out Various Inc.

Not saying this is a good investment, far from it, but one thing is for sure, you don't know shit about LBOs or reading S-1 filings.

[will76]

Originally Posted by AsianDivaGirlsWebDude

Friend Finder Network (FFN) aka Adult Friend Finder has made nice money for some people who still rah-rah it, while operating at a huge loss, and worse still they helped enable many companies which have hurt the adult biz over the past several years (think Zango, illegal tube sites, etc).

If I recall correctly there was also possibly some sort of murky connection between the people behind Penthouse and the people at iBill who cost numerous webmasters (including myself) collectively tens of millions of dollars.

The customer complaints against AFF and their associated companies are notorious on such consumer boards as the Rip-Off Report etc.

Here is an interesting story about the FFN IPO reported today in a Financial Journal, a sort of caveat emptor for anyone considering to invest in this very risky company:



ADG

Stanton and Bell and his crew with Penthouse was in control at ibill went it was on the slide, you know when all of the money went *poof* and we all got left holding the bag.

After reading all of that you would have to be an idiot to buy stock in that company if it ever did manage to go public. The only people who would make money would be the shareholders who cash in their stock right away, while the prices plummit and as the company continues to sink the idiot public who bought stock would be the ones holding the bag.

Lets see, the company is drowning in debt, has a negative cash flow, needs to go public to get people to "buy in" so they can help pay off some creditors, just to have the company continue to lose money each month and go more into debt.....

Does the name Mark Bell and Stanton ring a bell, anyone remember how he got involved with ibill and what happened after that.... think people... this is a train wreck in the making, these guys are trying to get what they can out of it before it crashes, and where do you think that money is going to come from ????

[will76]

Originally Posted by andrej_NDC

I can't wait for the idiots to be out of business.

Me too i just hope they don't take everyone;s money with them when they go. If they can just go out of business without an IPO they will be screwed and at most pull an "ibill" where just the affiliates who are owed money will be screwed out of their last couple checks.

You have to be crazy if you think AFF is going to be around for long and that you are going to be paid in full when they do close their shop lol

[weekly]

so, I am Sleazydream and I am bankrupt and a useless fucking business man. I need money fast. I go out and ask for a huge unsecured loan to keep sexsignals or whatever the fuck it is alive. I am sure there are lots of people just dying to toss money at me. What is the difference here except the amount are astronomical. They are obviously not very good at what they do....which should be making money, not losing it. Or am I missing something here?

[will76]

Originally Posted by AsianDivaGirlsWebDude

A name change, not making any money, a lot of debt: If that description sounds like a recipe for a dicey online date, then investors might want to apply the same principles to the coming week’s IPO of Web-site operator FriendFinder Networks Inc.

FriendFinder, which operates more than a dozen Web sites aimed primarily at people looking for relationships or flings, changed its name 18 months ago from Penthouse Media Group. It isn’t profitable, and until recently was in default on its debt covenants.

It struck a deal in October with its creditors to waive its defaults in exchange for all the money it raises in its initial public offering.
ADG

i've never seen anything so clear and can't understand how other people can see it. Could people really be so stupid to buy stock?

The money "raised" from from the IPO is going to go towards paying some creditors and you would have to be a fool if you didnt think the shareholders wont make a killing on the day it goes ipo. Where does that money come from, people who buy stock. The company is sinking fast even with paying off its debt.

It is so obvious that it is the way for some of those creditors and share holders to cash out on everyone else's dime.

I dont know shit about stocks and ipos but I can see how this one will play out. Previous dealings with these people and stuff penthouse touched, its track record, the way the company conducts itself... oh there is no way people wont be getting screwed big time on this deal... just watch and see. lets bump this thread in 1 year and see what happened.

[SL|M!]

i put my money on berkshireB before the split. Now they are being listed on the S&P

[andrej_NDC]

Originally Posted by will76

Me too i just hope they don't take everyone;s money with them when they go. If they can just go out of business without an IPO they will be screwed and at most pull an "ibill" where just the affiliates who are owed money will be screwed out of their last couple checks.

You have to be crazy if you think AFF is going to be around for long and that you are going to be paid in full when they do close their shop lol

Yes, any affiliate sending still traffic is risking way too much. And sending to their revshare program is just crazy nowadays.

But I bet when they close shop, we will see 1000 "Where is my money" threads on GFY. People will never learn from other people's mistakes.