The Post Lehman Era

PLAYBOY IN MARKET FOR A SUGAR DADDY WITH $300M

By KEITH J. KELLY

May 22, 2009 --

PLAYBOY Enterprises, the far-flung empire founded by Hugh Hefner in 1953, is quietly being shopped around for $300 million, sources tell Media Ink.

But so far, well-heeled suitors that have been approached, like Apollo Capital Partners and Providence Equity Partners, haven't stepped up.

The battered company's market capitalization is now around $100 millionand nobody has been willing to pay the substantial premium that it would take to persuade Hef to sell.

Sources said the sellers are looking for far more than the company's market capitalization because that would ensure Hef has enough on hand to maintain his lavish lifestyle.

"Everyone says he'll never let go, that he'll take it with him to the grave," said one source.

The empire's iconic bunny ears are one of the most identifiable trademarks in the world, but the empire has fallen on hard times as the Internet and video-on-demand have eroded its core brand, the magazine.

Hefner, now 83 years old, said recently that one of his biggest regrets was taking Playboy public.

He still controls about 70 percent of the voting stock, and as of March 31, the second-biggest shareholder was Wells Capital, which held a 10 percent stake. Fidelity is third at 7 percent.

Sources said that James Griffiths, a former president of the entertainment group, has been involved in the potential sale process.

Playboy has been under intense pressure and has been furiously cutting costs. In the most recent quarter, the company said it lost $13.7 million, compared with a loss of $4.2 million a year ago. Revenue eroded to $61.6 million in the quarter from $78.5 million a year ago.

Christie Hefner, Hef's daughter, stepped down as CEO in January and formally left the board at its annual meeting last week, severing her ties.

A Playboy spokeswoman said, "We have not received a proposal for purchase, nor has Mr. Hefner indicated that he will listen to proposals regarding a sale. However, as a public company, we will listen to proposals that could create value for all of our shareholders. "

Courtesy - The New York Post