Vancouver-based BBTV Holdings, the holding company behind media and technology company BroadbandTV, has secured a $21.6 million CAD ($16.1 million USD) loan from MEP Capital Holdings III.
BBTV closed this financing to “support its path to profitability,” with the intention of using this recent loan to pay off its overdraft facility with a Canadian chartered bank. BBTV did not disclose the exact amount of its overdraft balance, or the lender of the facility.
MEP Capital Holdings III is a private equity fund managed by MEP Capital, which invests in media and entertainment companies.
“We have also allocated additional cushion to help withstand future macroeconomic uncertainty if it materializes along our path to profitability.”
– KB Brinkley, BBTV
In the company’s third-quarter earnings for 2022 it reported $20.8 million CAD in cash, and that it had used $10.6 million CAD of its $15 million CAD overdraft facility.
Of the $16.1 million loan from MEP Capital, BBTV said that $10.1 million has been committed by the investor, with $6 million being conditional upon the company’s performance targets being met for the first half of 2023.
Founded in 2005 by CEO Shahrzad Rafati, BBTV’s platform allows partners to distribute, manage, and monetize video content.
BBTV has made moves to improve its balance sheets in recent months with the goal of acquiring more financing.
In October, BBTV announced it is working with former majority shareholder, European media conglomerate RTL Group to help provide BBTV access to additional working capital.
Prior to BBTV going public on the Toronto Stock Exchange in 2020, RTL held a 51 percent stake in BBTV. Much of BBTV’s IPO went to buying out RTL. However, RTL still held $30.9-million in convertible debt in BBTV, and as of 2020 was owed a further $15.7 million in accrued interest. RTL holds the option to convert its debt into subordinate voting shares of BBTV.
As of October, BBTV stated that RTL had reduced its debt under its secured convertible promissory loan note by approximately $12.8 million to approximately $19.2 million. This was meant to improve BBTV’s balance sheet in order to attract new debt financing. The goal was to help provide the company with access to “additional working capital during the current uncertain macroeconomic environment,” as well as to continue to develop its Plus Solutions and “other growth initiatives.”
As part of its third-quarter financial results, BBTV acknowledged that RTL agreed to a 40 percent ($12.8 million) debt forgiveness reduction to its convertible note. After RTL’s debt forgiveness, BBTV said its long-term debt balance was at $45.3 million as of September 2022.
As part of what BBTV describes as its “cost optimization plan,” the Vancouver company reduced its headcount by approximately 14 percent in June. As a result of its overall cost optimization program, which includes the layoffs, BBTV said its operating costs as of Q3 2022 declined by $2.2 million compared to the same quarter in the previous year.
Liquidity issues have been increasingly common among organizations that operate in the tech sector due to multiple macroeconomic factors that have fostered a volatile market. The issue has trickled down to startups from the investor level, and been caused by broader economic market conditions.
Public companies, like BBTV, have witnessed their stock prices slashed significantly amid the economic cooldown. BBTV, which is trading at $0.61 CAD at press time, saw its share price decline by over 77 percent in the past year.
BBTV made changes to its leadership team earlier this year, which includes the replacement of its CFO Ben Groot with former EY associate partner KB Brinkley. Groot remains as a member of BBTV’s finance team, with a focus on financial planning and analysis, as well as special projects. On its board of directors, BBTV also announced at that time that Edmonton Unlimited CEO Catherine Warren replaced Hootsuite founder Ryan Holmes as independent director.
Following mass layoffs within their own organizations, several Canadian tech companies have also seen significant changes to their leadership teams within the last year, including BBTV.
Speaking to BBTV’s secured loan from MEP Capital, Brinkley said: “We believe that we have also allocated additional cushion to help withstand future macroeconomic uncertainty if it materializes along our path to profitability.”