The move follows a recommendation by an independent special committee of BBTV’s board of directors. In a statement, special committee chair John Kim argued that the proposed go-private transaction would provide liquidity to BBTV shareholders and debtholders while also alleviating BBTV of the financial and administrative burden associated with being a public firm.
From its peak in early 2021, the price of BBTV’s shares on the TSX has dropped nearly 98 percent to $0.36.
As part of the proposed transaction, a holding company owned by BBTV founder, chair, and CEO Shahrzad Rafati and BBTV director Hamed Shahbazi—also the chair and CEO of fellow TSX-listed, Vancouver firm Well Health Technologies—will acquire and then merge with BBTV.
While BBTV’s board has already approved this transaction, it remains subject to customary closing conditions as well as shareholder, debtholder, court, and regulatory approval. BBTV expects the deal to close around the end of November. Once that happens, the company will seek to be delisted from the TSX and cease operating as a reporting issuer.
Founded in 2005 and also known as BroadbandTV, BBTV is a multi-channel network that helps online creators manage, distribute, and monetize their content. BBTV first went public on the TSX less than three years ago, raising $172 million CAD at $16 per share and at a more than $300-million valuation during the beginning of a boom in Canadian tech initial public offerings.
But since then, market conditions have deteriorated and BBTV—like other Canadian tech firms that went public at this time—has struggled. Since 2021, BBTV’s revenue has fallen, its losses have grown, the company has cut staff, brought on a new CFO, and contended with a messy public dispute with one of its higher-profile clients.
During this time, BBTV has seen the vast majority of its stock value wiped out. From its peak price in early 2021 at $14.49, BBTV’s shares have dropped nearly 98 percent to $0.36, and a market cap of roughly $5.4 million as of publication time.
The proposed go-private deal entails the Rafati and Shahbazi-owned holding company buying all issued and outstanding subordinate voting shares in BBTV that the pair does not already hold for nearly $0.38 apiece. This marks a 60 percent premium to BBTV’s closing price on Oct. 17.
Rafati and Shahbazi also agreed to pay $100 in cash consideration for each $1,000 principal amount of debentures held—67 percent up from their latest closing price—to the owners of BBTV’s publicly traded debt, and accrued and unpaid interest owed on them will be forgiven.
An undisclosed alternative capital provider has committed to providing debt facilities totalling $40 million to the Rafati and Shahbazi-owned holding company to help finance these moves and repay some of BBTV’s other loans.
Feature image courtesy BBTV.