BBTV Goes Private Less Than Three Years After IPO

Vancouver-based media tech firm BBTV Holdings (TSX: BBTV) made a significant announcement on October 17: it’s going private less than three years after it went public. This strategic decision was influenced by a recommendation from an independent special committee within BBTV’s board of directors.

The chair of this special committee, John Kim, emphasized in a statement that this transition to go private would offer BBTV shareholders and debtholders increased liquidity while also liberating the company from the financial and administrative complexities tied to public trading.

The core of this transition revolves around a meticulously planned transaction. A holding company owned by BBTV’s founder, chair, and CEO, Shahrzad Rafati, and BBTV director Hamed Shahbazi, who is also the chair and CEO of fellow TSX-listed Vancouver firm, Well Health Technologies, will acquire and merge with BBTV.

Although BBTV’s board has already granted approval for this move, it remains subject to customary closing conditions and requires consent from shareholders, debtholders, the court, and regulatory authorities. BBTV anticipates the deal to conclude by the end of November. Upon completion, the company aims to delist from the TSX and cease its operation as a reporting issuer.

The proposed go-private deal entails the Rafati and Shahbazi-owned holding company purchasing all issued and outstanding subordinate voting shares in BBTV for nearly $0.38 each, representing a 60% premium over BBTV’s closing price on October 17.

In addition, Rafati and Shahbazi have agreed to provide $100 in cash consideration for each $1,000 principal amount of debentures held, which is a significant 67% increase from their latest closing price. Furthermore, accrued and unpaid interest on these debentures will be forgiven.

To facilitate these transactions and repay some of BBTV’s existing loans, an undisclosed alternative capital provider has committed to offering debt facilities totaling $40 million to the holding company owned by Rafati and Shahbazi.

Established in 2005 and renowned as BroadbandTV, BBTV is a multi-channel network dedicated to assisting online creators in managing, distributing, and monetizing their content. Its initial public offering on the TSX, less than three years ago, raised $172 million CAD at $16 per share, with a valuation exceeding $300 million, aligning with the boom in Canadian tech IPOs during that period.

This marks a stark contrast from the current go-private deal at $0.38 per share.

Nonetheless, BBTV, like several other Canadian tech firms that went public around the same time, has encountered challenges in a shifting market landscape. Since 2021, the company’s revenue has dwindled, losses have mounted, staff reductions have been made, and a new CFO was brought onboard. Additionally, BBTV faced a contentious public dispute with one of its prominent clients.

Consequently, BBTV’s stock value has taken a substantial hit. Its shares have seen a staggering decline, plummeting nearly 98% from the peak price of $14.49 in early 2021 to $0.36, with a market capitalization of roughly $5.4 million at the time of this publication.

At the close of Q2 2023, BBTV reported $14.4 million in cash, a decrease from the $22.8 million recorded in the same period of the previous year, Q2 2022. The company’s long-term debt balance as of June 30, 2023, stood at $44.3 million, with maturities primarily scheduled for 2026 or 2027. This represents a reduction of $9.8 million from the $54.1 million seen in the Q2 of the prior year. Notably, the decrease in debt is largely attributed to the IFRS accounting treatment linked to the RTL discounted payout option that was announced during the quarter.

BBTV’s total revenue for Q2 2023 amounted to $72.8 million, marking a 27% decline in comparison to the $99.9 million achieved in Q2 2022. This decline can be primarily attributed to a higher proportion of YouTube Shorts videos, which are still in the early stages of monetization.

In terms of operating expenses, BBTV recorded $10.6 million for Q2 2023, indicating a decrease of $5.6 million or 34% when compared to the same period in the previous year, Q2 2022. Additionally, this represents a 28% reduction when compared to the first half of 2022. These cost reductions are attributed to resource downsizing and operational realignment efforts. BBTV anticipates further optimization of its operations in the coming months.

Information for this briefing was found via Betakit and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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