FriendFinder Still Sees IPO, But Less Capital Raised (FFN)

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FriendFinder Networks, Inc. may be one of the more unusual formal initial public offerings out there.  It might be classified as an internet media or social networking company, but this is the parent of AdultFriendFinder, a site where adults hook-up online…. literally.  The company filed back in December 2008 to sell up to $460 million in common stock via an IPO, but we all know that there was no way an adult-themed company would be able to make it to the IPO stage during the first part of 2009 when the markets were more than just spooked.  The IPO is still planned based on an amended S-1 filing from Friday evening, but the implied share sale is far less than what the company originally telegraphed.  The IPO is for 20,000,000 shares of common stock being sold by the company and the indicated price range is $10.00 to $12.00 per share.  At the mid-point, that will raise $220 million.

The company is selling all the shares in the IPO, but all the net proceeds from the offering will be used to pay waiver fees and used to repay a portion of its outstanding debt.  The company noted that it has been approved for listing on The New York Stock Exchange under the ticker “FFN.”  The lead underwriters are RenCap (Renaissance Capital) and Ledgemont Capital Markets LLC, and co-managers are Merriman Curhan Ford and Lighthouse Financial.

The company also owns Penthouse and now lists more adult friend-finding sites specifically for specific groups.  The debt it owes is from what was roughly a $500 million acquisition of AdultFriendFinder and parent in 2007, and the company has close to $433 million in debt outstanding related to the deal.

We have not yet seen full 2009 revenue figures as they are not yet available.  The figures in the SEC filing show that for the first nine-month period of 2009, revenues were $244.4 million, which is down from $243.8 million for the same period in 2008.  The good news is that the net loss for that same period in 2009 came down to $27.4 million versus a loss of $32.3 million for the same period in 2008.

The online world and the online adult-themed world appears to no longer be infinite.  Most adult-oriented companies that have come public have tended to do that via OTC or by buying shell companies.  The notion that this one will be NYSE-listed is something very new.

JON C. OGG

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