Playboy Refinances to Help Jumpstart Growth

Bob Johnson

LOS ANGELES — Playboy Enterprises has completed key financing of $150 million from a single lender that it hopes will help jumpstart brand licensing and media growth.

The company said yesterday that the loan significantly enhances its ability to reposition itself into a lifestyle brand with “a lean, efficient operating structure.”

“By further improving our capital structure with lower cost funding that improves our investment flexibility, Playboy is better positioned to leverage its reinvigorated brand to drive growth in revenue and cash flows through attractive opportunities in global licensing and content, including digital media,” CEO Scott Flanders said in a statement.

He added, “This strategically important refinancing is the direct result of the creative and diligent work of our financial partners and advisors under the direction of EVP/CFO Christoph Pachler and EVP/business affairs Rachel Sagan.”

According to Moody’s Investors Service, Playboy owes $157 million in loans and is seeking to refund $147 million of first-lien debt and its $10 million revolving credit line.

Playboy’s debt will be more than eight times its earnings before interest, taxes, depreciation and amortization this year, and 6.5 times in 2015, according to Standard & Poors (S&P) adjusted figures.

Moody’s Investors Service withdrew Playboy’s B2 corporate rating, and S&P rates the company CCC+, a level reserved for borrowers it deems “currently vulnerable to nonpayment.”

Despite a $35 million debt reduction since 2013, the bid for refinancing still reprsents an uphill battle for the company that’s licensing growth has been offset by dwindling print and a brand suffering from a porn-saturated market.

Some analysts also believe that the single lender possibly indicates that the company had trouble finding a group or investors, or perhaps it’s a new investor willing to take the risk.