NEW YORK (Reuters) - FriendFinder Networks Inc FFN.O shares fell sharply in their debut on Wednesday, as the publisher of adult magazine Penthouse finally completed its 2008 plan to go public.
Its shares finished their first day of trading on the Nasdaq at $7.85, or 22 percent below the IPO price, after dipping as low as $7.23.
FriendFinder, which also operates a string of adult social networking websites, raised $50 million in its second attempt at going public after its plans to list on the New York Stock Exchange derailed.
"It's sort of a broken IPO, they've resized the deal so many times," said Bill Buhr, IPO strategist at Morningstar.
Boca Raton, Florida-based FriendFinder first filed in 2008 for a NYSE IPO of up to $460 million, underwritten by a Russian investment bank, Renaissance Capital, and a New York boutique, Ledgemont Capital.
The IPO, expected to sell 20 million shares for $10 to $12 each, struggled. First, it was nearly halved and then, in early 2010, was indefinitely shelved as the company cited inopportune market conditions.
"As the stock sits on the shelf, so to say, it starts to develop cobwebs," said David Menlow, president of IPOfinancial.com, of the pressure delays put on IPOs.
FriendFinder revived the plan earlier this year, filing for an IPO of up to $69 million -- this time on the Nasdaq. It also switched underwriters to a set of names that rarely appear on IPO prospectuses: Los Angeles-based brokerage Imperial Capital and Ladenburg Thalmann & Co, an investment banking subsidiary of Ladenburg Thalmann Financial Services Inc (LTS.A).
"(FriendFinder) probably suffered a little bit from the industry they're in. They may have had a reputation issue," Buhr said.
"It's one of those deals where typical underwriters aren't going to get involved, so you have your B and C step in."
FriendFinder ended up selling 5 million shares for $10 each on Tuesday, at the bottom of a proposed price range of $10 to $12 per share.
"They were so desperate to go public ... To put a value on the company was much more important to them than to raise any amount of money," said Josef Schuster, founder of Chicago IPO investment firm IPOX Schuster LLC.
"In the process, they were willing to give up everything along the way," he said.
FriendFinder, whose websites include AdultFriendFinder.com, Amigos.com, BigChurch.com and SeniorFriendFinder.com, planned to use all of the proceeds to pay down debt -- of which it has quite a bit.
Last year, the company co-issued, through its subsidiary Interactive Network, a total of $551 million of debt due in 2013 and 2014 -- all to cover previous debts, according to the filing.
"(The IPO) is such a small deal, I'd have concerns about how much debt they can actually alleviate," Buhr said.
FriendFinder also disclosed in its filings that it had breached several covenants on some of its loans and note agreements during some quarters of 2008 and 2009, failing to maintain appropriate financial ratios.
Also last year, FriendFinder made a bid to buy rival Playboy Enterprises Inc for $210 million, which was thwarted when Playboy founder Hugh Hefner decided to take the company private.
FriendFinder's revenue grew about 6 percent to $346 million last year, while its net loss increased 14 cents to $3.14 per share.
Editing by Tim Dobbyn, Steve Orlofsky and Andre Grenon