According to the New York Post, the company that wants to buy High Times magazine, Los Angeles venture firm Oreva Capital which recently purchased LGBT brands The Advocate, Pride, Out Traveler and LBGT.com, has submitted a “stalking horse” bid to become the new owner of Penthouse.
Adam Levin, whose Oreva Capital agreed to buy High Times in mid-2017, formed a company called Dream Media Corp., which took over a secured 2-year-old, $10 million loan to Penthouse that was in default. It is believed there are several other potential suitors. Levin’s bid is said to come in at $3 million at auction, sources said.
Dream Media Corp. purchased the loan from ExWorks Capital.
Under terms of the bankruptcy asset purchase agreement, any bidder who wants to top Dream Media’s bid must pony up $3.1 million to stay in the game. The auction is set for June 4.
Penthouse filed for a reorganization under terms of Chapter 11 in January, which would have allowed it to continue to operate under the current ownership, headed by Kelly Holland. The court-appointed bankruptcy trustee, David Gottlieb, said last month that the company was insolvent and was expected to lose $732,000 over the next three months.
Holland said that Stormy Daniels posed for “the standard modeling fee” of several thousand dollars.
When Holland took over the assets in 2016, she was paying an insane 23% interest rate for a $9 million loan from ExWork Capital. The lender eventually received about $5.3 million before the loan went into default and the interest pushed the loan amount to over $10 million.
In court filings, the company listed its debt levels as unsecured creditors of only $128,553 but a secured creditor of $10.3 million representing the ExWork Capital/Dream Media debt. This means that the company was generating revenue, and would likely have been turning a profit if not for the huge loan payments. The drag on funds caused by the loan caused other debts, including interest and late payment fees, to pile up, creating a debt spiral.
Oreva and the blank check
In December 2017, Oreva announced it was purchasing High Times from a family trust that controlled it for a reported $70 million through Origo Acquisition Corp., a so-called special purchase acquisition corporation — also known as a blank check corporation. But SEC filings said the deal was not finalized and the company is now fighting a move by NASDAQ to delist its stock.
Holland purchased the Penthouse assets from Friend Finder Networks Inc., which had filed for bankruptcy in 2013. The 53-year-old magazine was founded by Bob Guccione Sr., who lost control of his media empire and his extravagant Manhattan townhouse with gold toilet before he died in 2010.
