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Care Concepts Secures Funding for Penthouse Acquisition

Care Concepts Secures Funding for Penthouse Acquisition
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Oct 1, 2004 12:31 PM PDT    Text size: 
DEERFIELD BEACH, Fla. — Care Concepts I Inc. has successfully obtained the funding necessary to purchase almost half of the stock in Penthouse-publisher General Media, according to a release issued thiFriday.

The announcement moves the now-bankrupt publisher one step closer to being reacquired by Penthouse International Inc. in what is shaping up to be a complicated stock-swapping strategy.

With the new funding, secured by privately placing debt and equity securities, Care Concepts is set to purchase 48.3 percent of the stock in General Media from Penthouse International when it emerges from bankruptcy next week.

As part of a previous deal, Care Concepts has also agreed to issue an aggregate of 49.9 percent of its stock to Penthouse International in exchange for acquiring the beleaguered payment processor iBill, currently a subsidiary of General Media.

Once the iBill deal goes through, which Care Concepts insists will happen on or before Jan. 21, 2005, Penthouse International will effectively be a major shareholder of a company that is, in turn, a major shareholder of the two former Penthouse subsidiaries.

“To retain 100 percent equity ownership in General Media […] would have required approximately $70 million in cash that would have been highly dilutive to Penthouse International shareholders,” said Claude Bertin, executive vice president of Penthouse International.

“Penthouse International has avoided this direct dilution by becoming a major shareholder of Care Concepts,” Bertin continued. “Thereby benefiting from a continued investment in the future of Penthouse Magazine without issuing additional Penthouse International stock.”

The announcement came a day after iBill, currently suffering from a dispute with its former payment processor First Data, posted a warning on its Commerce Management Interface that said its ability to pay clients is still being hindered.

Care Concepts acquisition of iBill was delayed last week after the American Stock Exchange threatened to delist the company’s stock for a variety of public issue reasons, including material omissions in filings and a failure to take a shareholder vote in relation to the iBill transaction.

Stock in Care Concepts fell more than 80 percent this week, beginning at $5.90 as the markets opened on Monday morning and falling to $1.10 by midday Friday.

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