Business Context and Reporting Period
This Form 8-K, filed February 16, 2021, reports the completion of PLBY Group, Inc.’s business combination with Playboy Enterprises, Inc. on February 10, 2021. Mountain Crest Acquisition Corp. changed its name to PLBY Group, Inc., Playboy became a wholly owned subsidiary, and PLBY ceased to be a shell company. PLBY common stock began trading on Nasdaq under the symbol PLBY.
The filing incorporates Playboy historical financial statements and pro forma information from the definitive proxy statement, but does not itself present a complete current-period income statement or balance sheet.
Key Financial Metrics and Capitalization
| Item | Reported information |
|---|---|
| Aggregate merger consideration | Approximately $381.3 million, consisting of 23.92 million shares valued at $10.00 per share, subject to a net-debt adjustment, and assumption of no more than $142.1 million of Playboy debt under the transaction target. |
| PIPE financing | 5.0 million shares issued at $10.00 per share for $50.0 million of gross proceeds. |
| Debt assumed or remaining at closing | Approximately $158.2 million outstanding under Playboy’s credit agreement. |
| Common shares outstanding after closing | 33,560,980 shares, net of 700,000 treasury shares held by Playboy. |
| Options | Options for 3,560,541 shares, with a weighted-average exercise price of $5.61; generally fully vested except for the specified January 31, 2021 grant. |
| RSUs | 2,045,634 shares issuable upon settlement of terminated RSUs one year after closing. |
| Liquidity, revenue, profit, cash flow and margins | The filing text does not provide clear post-closing values for revenue, net income, EBITDA, operating cash flow, free cash flow, cash balances, liquidity ratios or margins. Historical and pro forma information is incorporated by reference. |
| Dividends | No cash dividends have been paid. Management expects to retain earnings, if any, and does not anticipate dividends in the foreseeable future. |
Material Changes Versus the Prior Comparable Period
- The transaction changed the registrant from Mountain Crest Acquisition Corp. into the combined operating company, PLBY Group, Inc.
- PLBY raised $50.0 million of gross PIPE proceeds and assumed approximately $158.2 million of Playboy debt.
- Existing Playboy equity awards were converted or settled through PLBY equity, including options for 3.56 million shares and RSUs for 2.05 million shares.
- RT-ICON Holdings LLC became the largest holder, with 17,101,047 shares, or 51.0% of outstanding common stock immediately after closing. Drawbridge held 10.8%.
- Playboy’s prior management largely continued in leadership roles, while Lance Barton was appointed CFO effective March 1, 2021, succeeding David Israel, who was expected to transition to another operating role.
- Marcum LLP was dismissed as independent registered public accounting firm effective upon filing the 2020 Form 10-K; Prager Metis CPAs LLP is expected to become the successor auditor.
Guidance, Outlook, Risks, Contingencies and Unusual Items
The filing does not provide new quantitative revenue, earnings or cash-flow guidance. Management’s discussion, business description and risk factors are incorporated from the definitive proxy statement. Forward-looking statements are subject to risks involving growth execution, competition, liquidity, cash flows, acquisitions, employee retention, legal and regulatory matters, Nasdaq listing, COVID-19 effects, geopolitical conditions and uncertainty in projected financial information.
- Playboy received a February 6, 2021 demand letter from AVS Products, LLC disputing the termination of a licensing agreement. Playboy states that it believes the claims are without merit and intends to defend the matter.
- Executive compensation included 2020 bonuses of $1.0 million for Ben Kohn, $250,000 for David Israel and $175,000 for Chris Riley, plus transaction bonuses of $1.85 million, $350,000 and $500,000, respectively.
- The company entered into registration rights, investor rights, voting and lock-up arrangements. RT-ICON’s board nomination rights vary with its ownership, and specified lock-up shares are generally restricted for 12 months, subject to an earlier partial release if the stock-price condition is met.
- New or assumed executive agreements contain substantial cash bonuses, equity awards, severance provisions and change-in-control vesting terms. Riley’s base salary is $400,000; Beuting’s is $325,000; and Barton’s is $500,000.
- The filing includes a new $10 million company-paid life insurance benefit and not less than $2.5 million of annual disability coverage for certain executives under their employment agreements.
Most Important Facts for Investors to Verify
- Review the incorporated historical and pro forma financial statements for actual revenue, profitability, cash flow, cash, working capital and margin trends.
- Reconcile the approximately $158.2 million of outstanding debt with the credit agreement, amendments, covenant requirements, interest rates and maturity profile.
- Confirm the final net-debt adjustment to merger consideration and the fully diluted share count, including options, RSUs, warrants and other equity awards.
- Assess the effect of RT-ICON’s 51.0% ownership, board nomination rights, registration rights and lock-up provisions on governance and potential future selling pressure.
- Monitor the AVS licensing dispute and any other legal or regulatory contingencies.
- Review the 2020 Form 10-K and the auditor transition from Marcum LLP to Prager Metis CPAs LLP, including any subsequent reportable events.
- Evaluate executive compensation, transaction bonuses, severance obligations and performance-based equity dilution.