Quote:
Originally Posted by slapass
Most of the debt is owed to the founding partners. I don't think they will go under but the vehicle for holding the company might change.
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Difficult to understand the debt magics. Normal companies will simply close quickly if in debt (even if owners money and not bank ones is being lost), but not Penthouse/AFF:
http://en.wikipedia.org/wiki/FriendFinder
Financier Marc H. Bell, a high-net-worth of South-Florida, formed a partnership for the Penthouse acquisition, called it PET Capital Partners (as in, "pet of the month") amassing 89 percent of the magazine's $50 million in bond obligations. "We didn't buy the company, we bought the debt," says Bell.
On October 4, 2004, General Media emerged from bankruptcy and was renamed the Penthouse Media Group. It is now owned by three investors: Bell, Daniel Staton (a South Florida investor), and Absolute Capital Management, run by Florian Homm, a German hedge-fund manager, who lives on the Spanish island of Majorca. Post Advisory Group, a $9.0 billion hedge fund owned by the insurance company Principal Financial Group, formally committed in writing on March 4, 2004 to $30 million to General Media.
In August 2005, PET Capital Partners completed a financing with each of Post Advisory, Canyon Capital, and Satellite for $40 million. According to SEC-filed documents dated August 31, 2005, payments were made to directors and officers of $14,502,901 and "payments to others" were $11,710,965.38, leaving the company with working capital of $11,441,218.59.
In December 2007, PMGI announced the purchase of Various, Inc. for $500 million.
According to thedocument filed in December 2008, of the company's $691 million in financial liabilities, $411 million had been reclassified from long-term to short-term. FriendFinder Networks had $420.1 million that was immediately due and only $43.3 million in cash on hand.
As of January 17, 2010 FriendFinder Networks has a negative net worth equal to $118 million, $32 million in cash on hand and $650 million in
liabilities.
A
liability is a an obligation (future sacrifice of economic benefits) of (the AFF/PEnthouse company) arising from (as a result of) past transactions or events (loans), the settlement of which may result in the transfer or use of assets, provision of services or other yielding of economic benefits in the future, an outflow from the enterprise of resources embodying economic benefits.
What if debt can't be paid in cash by the company... the guys who loaned, gets "the company and its assets", but if the company owners are mostly the same ones who loaned to the company, they get "each others debts", so I guess, they lost all the cash simply. But, I may be wrong.