Quickflix founder increases stake in struggling company, says capital raising is ongoing



The founder and chief executive of troubled DVD rental and online streaming company Quickflix Stephen Langsford has signalled that the market should not assume it is done with its capital raising.

The declaration comes after last year’s capital raising, which aimed to bring in $5.7m and fund an extensive below the line marketing effort to ward off intensifying competition, brought in just $650,000 from investors.

“On the capital raising we completed the first part of that just prior to Christmas,” Langsford told Mumbrella. “That was the rights issue among shareholders where we signalled if there was any shortfall then it would be available for the company to look for other shareholders.

“The process continues, so I wouldn’t draw the conclusion that the capital raising exercise is yet complete.”

The comments come as Quickflix’s shares today hit a record low of  $0.002 giving the company a market capitalisation of just $3.63m, well down on the $16.2m the company was worth 12 months ago when the share price was at 0.014 cents.

In June 2014 Quickflix reported it had 122,000 paid subscribers, while unofficial estimates put the number of Australian subscribers, using VPN services, to access Netflix at around 200,000.

ASX documents show Langsford and his relatives were among the main investors in the most recent capital raising, with a notice of initial substantial shareholder showing that he increased his stake in the company to 130.3m shares, a 7.18 per cent share of the company, up from 4.97 per cent in July. 

Lagsford was tight lipped when asked about the investment, stating: “We have made all our disclosures on what we have raised and my increased stake. I have increased my holding as a result of participating in the rights issue that we did last Christmas.”

ASX documents show Langsford acquired 57.4m new shares, an investment of $172,000. He was not the only Quickflix executive to invest in the company with CFO Simon Hodge buying 11.4m shares an investment of $34,200.

The Quickflix boss acknowledged the looming threat from rivals, with global streaming giant Netflix rumoured to be planning a $30m Australian ad campaign, as well as new local streaming entrants Stan and Presto, but argued the company would benefit from the increased awareness among consumers.

“Quickflix is an established business, we have existing customers presently through online video rentals and also streaming which is generating revenue for us, so we have a degree of flexibility about how we approach customer acquisition,” said Langsford.

“There is definitely competition in this quarter but a lot of that will be above the line advertising. I believe and we have said that will boost awareness amongst the category.

“Our game plan is to move the business to sustainability. The advantage Quickflix has is that we do have an existing customer base which is generating revenue and we do have a strong point of difference to the incoming SVOD players, in that our business is complemented by DVD rentals – not only SVOD revenue but transactional.”

Late last year StreamCo, the parent company of rival Stan, took a $1m stake in Quickflix with redemption rights should the company face a “liquidation event”. Since then Quickflix’s share price has continued to slide.

Langsford remained bullish about the company’s future despite the share slide, saying: “We are confident that we will continue. It is right that our share price has come off, but that is at time when we have seen our customer numbers reach new heights.

“Getting ready for streaming is an expensive exercise – we have incurred that cost. While others are now incurring that cost we are now focusing on getting more and more distribution and more and more customers.”

Nic Christensen


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