Shares of Playboy Inc (NASDAQ: PLBY) saw a significant rise of 11.5% in premarket trading on Monday, following the company’s announcement regarding a substantial share buyback deal. The agreement entails the repurchase of 16.6 million shares from Fortress Investment Group at a purchase price of $1.05 per share. This buyback accounts for nearly 15% of Playboy’s total outstanding shares, with an overall transaction value of approximately $17.4 million.
With this transaction, Playboy will completely eliminate Fortress’s equity stake in the company at a fixed price arrangement. The terms of the agreement stipulate that Playboy will upfront a payment of $2.0 million upon execution of the deal, followed by three additional scheduled installments totaling $15.4 million by December 31, 2026. Importantly, Playboy retains the option to accelerate the payment schedule at its discretion. Moreover, Fortress has committed not to sell, transfer, or otherwise dispose of these shares during the duration of the agreement.
The buyback deal is supported by affiliates of Rizvi Traverse Management and Byborg Enterprises, which have pledged to purchase the shares from Fortress on a pro rata basis should Playboy fail to fulfill the full terms of the purchase.
CEO Ben Kohn stated that the company has achieved five consecutive quarters of positive adjusted EBITDA and is confident that its intrinsic value surpasses the current stock price. Kohn emphasized that the share repurchase is expected to be immediately accretive to earnings per share, indicating a positive impact on the company’s financial performance.
To finance the initial purchase, Playboy utilized cash from its balance sheet and plans to employ both cash and other financing methods for the subsequent payments. This strategic payment structure is designed to maintain balance sheet flexibility while mitigating the likelihood of 16.6 million shares being flooded onto the open market.
This share buyback announcement comes in the wake of several recent operational advancements for the company, including a licensing agreement with Byborg, a joint venture in China with United Trademark Group, and an expedited paydown of senior debt.
