Playboy launches $100 million convertible talked to yield 2.5%-3.0%, up 30%-35%

By Ronda Fears

Nashville, March 8 - Playboy Enterprises Inc. launched $100 million of 20-year convertible notes late Tuesday with guidance for a 2.5% to 3.0% coupon and initial conversion premium of 30% to 35%.

UBS Investment Bank is bookrunner of the Rule 144A deal, which is slated to price after the market close Wednesday. Co-managers include Banc of America Securities LLC.

The senior subordinated notes will be non-callable for five years, then with a 120% hurdle through year seven. There are puts in years seven, 10 and 15. There is a 120% contingent payment trigger, too.

Full dividend and takeover protection are provided.

There is a $15 million proceeds greenshoe available.

Chicago-based Playboy said it expects to use proceeds, together with available cash, to fund the estimated $94.9 million required to fund the tender for its 11% senior secured notes due 2010 - including consent payments - and, depending on market conditions, may repurchase up to $5 million of class B shares, including short sellers participating in the convertible offering. Any remaining net proceeds are expected to be used for working capital and general corporate purposes.

Additionally, the company said the founder of Playboy, Hugh M. Hefner, has advised that, depending on market conditions, he intends to purchase up to $5 million in class B shares concurrently with the offering.

Playboy shares closed Tuesday off 32 cents, or 2.24%, at $13.97.

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