PLBY Group is doing a rights offering, debt paydown, and amended credit agreement to enhance its balance sheet flexibility as it relates to debt covenants. The company expects gross proceeds of $50mm from the offering if fully subscribed. With a prepayment of debt, the credit agreement will be amended to give the company the ability to waive applicable net leverage ratio covenants up through the second quarter of 2024. This will give the company the capital flexibility to invest as needed around growth initiatives without having to constantly have a back and forth with lenders. It reduces the bankruptcy concerns around the stock over the near term, perhaps giving equity investors more confidence to step in and start buying. We think the company is trading below a liquidation value of all of its assets.
For our latest thoughts on PLBY, see our note from the last earnings event: PLBY | Puts And Takes
