(CN) – A man who owns 177,000 shares of Playboy stock filed a class action accusing Hugh Hefner of rejecting two good offers for the company because of “Hefner’s insistence of maintaining the lifestyle to which he has grown accustomed.” Hefner is majority shareholder in Playboy, and rebuffed the offers though they were made “at a significant premium as Playboy’s stock price continues to deteriorate,” according to the complaint in Los Angeles Superior Court.
Lead plaintiff David Brown says he owns 47,000 shares of Playboy Class A stock and 130,000 share of Class B stock. Hefner owns nearly 70 percent of the Class A shares, which are the only ones with voting rights, and nearly 30 percent of the Class B shares, Brown says. He claims Hefner breached his “duties of care, loyalty and good faith to Playboy’s minority shareholders … by placing his personal interests above and ahead of the interests of the other shareholders and to their detriment.”
The class claims that “within the last six months Hefner has scuttled two attempts by potential suitors, Iconix Brand Management (‘Iconix’) and Golden Gate Capital (‘Golden Gate’) to acquire all or parts of Playboy at a significant premium as Playboy’s stock price continues to deteriorate.”
Then follows a sentence that, ironically or not, quotes a common statement used in divorce and alimony proceedings: “According to published reports, one of the main reasons why these deals failed was Hefner’s insistence on maintaining the lifestyle to which he has grown accustomed.”
Playboy shares sold as high as $36 “in its 1999 heyday,” but have fallen from around $10 in early 2008 to “as low as $1.06,” according to the complaint. It adds that Playboy lost $156 million in 2008, and another $23.5 million in the first 9 months of 2009.
Brown claims that suitors, so to speak, have offered more than $300 million – “three times the company’s market capitalization” at its “beaten down” stock price – but Hefner, 81, rejected them.
Citing a panoply of media reports, the complaint claims, among other things, that Hef complicated the negotiations by insisting that he can live at the Playboy Mansion until he dies, and that he continue to play some role in the company.
Brown demands punitive damages. He is represented by Jordan Lurie with Weiss & Lurie.