With a competing bid for Playboy from Penthouse and FriendFinder owner Marc Bell looming, Hugh Hefner has released the full text of his July 8 proposal to Playboy's board in which the 84-year-old offered to buy all of the beleaguered company's outstanding shares and take Playboy private.
In a statement Wednesday, Hef said private ownership "will reinvigorate the company and create a lasting legacy" for the bunny brand.
Here's the full text of Hef's letter:
July 8, 2010
Board of Directors
Playboy Enterprises, Inc.
680 North Lake Shore Drive
Chicago, IL 60611
Attention: David Chemerow
Gentlemen:
I am writing to you to inform you that I am interested in negotiating a transaction with our company to acquire all of the outstanding shares of Class A and Class B Common Stock of PEI that I do not currently beneficially own. In this transaction, I intend to partner with Rizvi Traverse Management LLC (“Rizvi Traverse”). Rizvi Traverse is a private equity firm with a special focus on the entertainment and media sector. Rizvi Traverse currently owns or has investments in International Creative Management, Summit Entertainment, Newbridge Capital and Clearscope Partners. Rizvi Traverse can bring significant resources to our company to help accelerate its growth.
Given my many relationships with our company – founder, editor-in-chief, chief creative officer, holder of 69.5% of the outstanding voting Class A common stock and 33.7% of the total outstanding shares of capital stock, I expect that a Special Committee of the Board of Directors will be formed to consider this transaction. I look forward to working with the Special Committee to move this transaction forward as expeditiously as possible.
I believe this proposal is in the best interests of our company and its minority stockholders. The proposal provides an excellent opportunity for the minority stockholders of PEI to realize liquidity for their shares at a significant premium to market values. I believe the proposal will also reinvigorate the company I founded and create a lasting legacy for the Playboy brand, a brand we have all worked hard to establish as one of the most widely recognized and popular brands in the world.
Please be advised that out of my concerns for amongst other matters the Playboy brand, the editorial direction of the magazine and our company’s legacy, I am not interested in any sale or merger of the Company, selling my shares to any third party or entering into discussions with any other financial sponsor for a transaction of the nature proposed in this letter.
I expect continuity of senior management through and following the transactions contemplated by my proposal. I am open to participation by continuing members of senior management in the new entity I and Rizvi Traverse propose to form to complete the acquisition (“NewCo”).
Based upon conversations with Rizvi Traverse which are in turn informed by Rizvi Traverse’s due diligence to date, I am in a position to propose that NewCo would acquire all of the outstanding shares of common stock not currently owned by me for $5.50
