Australia’s first streaming service Quickflix is trying to get rival Stan to restructure a massive share block it holds in the business, claiming it is putting off new investors as it seeks a new round of capital raising.
In 2014 Stan, owned by Nine Entertainment and Fairfax Media, bought a $1m shareholding from US cable giant HBO which also came with a series of warrants and covenants effectively blocking Quickflix from being sold without the new owners paying more than $10.5m to Stan.
Quickflix today put out a statement to the Australian Securities Exchange saying it was now looking to “restructure” Stan’s shares as it goes into yet another round of capital-raising from investors claiming they are “a significant disincentive for incoming investors”.
At the end of last month Quickflix filed its latest accounts (ASX: QFX) which showed the company has just $659,000 cash on hand and had seen a 22% fall in subscriber numbers for the quarter.
On Christmas Eve it also snuck out an announcement that it had restructured $7.5m owed to major studios for licensing agreements, while last month CEO Stephen Langsford told Mumbrella the business was pivoting away from streaming to concentrate on its still profitable DVD delivery and on-demand movie businesses.
In today’s statement, Quickflix said: “In order to progress its restructure and raise new capital, Quickflix is therefore seeking to reach agreement with Stan for the immediate restructuring of the RPS.”
Quickflick’s market cap on the ASX is $2.22m.
According to the statement, Stan’s holding must also legally be recorded as a debt of $11.6m on the Quickflix books.
It adds: “Whilst Stan can only ask for redemption of the RPS (redeemable preference shares) in limited circumstances, the company will rank behind the RPS.”
Stan has been approached for comment.