NEW YORK — Penthouse International announced that on March 31, 2004, Penthouse and Dr. Luis Enrique Fernando Molina, its principal stockholder, have entered into an agreement to acquire 75% of the outstanding Class A preferred stock of General Media, Inc., a 99.5% owned subsidiary of Penthouse. Closing of the purchase of the General Media preferred stock is scheduled to occur on or before April 15, 2004. General Media and its subsidiaries are currently debtors in a bankruptcy case pending in the United States Bankruptcy Court for the Southern District of New York. On March 3, 2004, Penthouse filed its proposed first amended and restated plan of reorganization to be financed primarily through senior debt financing from affiliates of Post Advisory Group and equity financing to be provided by Dr. Molina or his affiliates.

The holders of the General Media preferred stock, who also own approximately 89% of the approximately $46.0 million outstanding amount of General Media 15% senior secured notes due 2004, had originally objected to the Penthouse plan, and proposed a competing plan of reorganization that, if confirmed by the Bankruptcy Court, would have caused Penthouse to lose ownership of General Media.

Under the terms of the March 31 agreement, Dr. Molina and Penthouse have agreed to purchase the General Media preferred stock from the sellers for approximately $10.25 million, payable on March 31, 2008 under an 8% increasing rate note given by Dr. Molina and guaranteed by Penthouse. The note is secured by a pledge of the Series C convertible preferred stock of Penthouse held by an affiliate of Dr. Molina. Under the terms of the agreement, the sellers and their affiliates, including Marc Bell, have agreed to waive all objections to and support the Penthouse proposed plan of reorganization and withdraw their competing plan.

Claude Bertin, Executive Vice President of Penthouse said, “This transaction paves the way and significantly enhances the ability of Penthouse and Dr. Molina to obtain confirmation of our plan of reorganization, which we believe will benefit all classes of creditors of General Media.”

General Media and its subsidiaries are a brand-driven global entertainment business founded in 1965 by Robert C. Guccione. General Media’s flagship PENTHOUSE brand is one of the most recognized consumer brands in the world and is widely identified with premium entertainment for adult audiences. General Media caters to men’s interests through various trademarked publications, movies, the Internet, location-based live entertainment clubs and consumer product licenses. General Media licenses the PENTHOUSE trademarks to third parties worldwide in exchange for recurring royalty payments.

In addition, on March 22, 2004, Penthouse acquired Internet Billing Company, LLC. iBill is a leading e-commerce company focused on enabling businesses to market and sell their products over the Internet, including online subscriptions. iBill also manages all back-office functions including reporting, tracking, customer service and sales transactions. Its services are powered by technology that integrates online payment processing, fraud control, affiliate management and financial reporting and tracking.

Over the last five years, iBill has successfully processed over $2.0 billion in online subscriptions representing tens of millions of consumer transactions. iBill was acquired from Intercept, Inc., which divested of the iBill division as part of a plan to focus on its core business of outsourced technology solutions to community banks.