Embattled Australian subscription video-on-demand (SVOD) provider Quickflix has been acquired by United States-based Karma Media Holdings for AU$1.3 million, with services for Quickflix customers to continue.
Under the Deed of Company Arrangement (DOCA), Quickflix will continue trade, provide a return for its creditors, and retain the "majority" of all jobs, while employees who are made redundant will receive full entitlements.
Unsecured creditors will receive 21.5 cents in every dollar.
"Quickflix has encountered corporate challenges and impediments in a highly competitive environment. As administrators, we have been able to continue trading the business since our appointment, reduce costs, retain value, keep employing the majority of staff, and conduct a global sale process," said joint voluntary administrator Deloitte Restructuring Services partner Jason Tracy.
"The result is a good outcome for stakeholders. Under new control, the Quickflix business will continue to trade, 24 employees will be retained, departing or already departed employees will receive all relevant entitlements, creditors will get a return, and suppliers will have the option of trading with the continuing business."
All provisions in the DOCA are expected to be completed by early February.
Quickflix entered voluntary administration in April after its failed negotiations with competitor streaming company Stan, as well as constant customer and cash losses over the last year.
The embattled streaming service provider attributed its inability to raise new capital to save the company on the redeemable preference shares (RPS) held by rival company Stan, worth AU$11,730,549.
Stan told Quickflix that it would only consider structuring the RPS if Quickflix were to pay it AU$4 million in cash. Alternatively, Stan suggested that Quickflix could provide AU$1.25 million in cash, as well as transfer all of its customers -- worth AU$250,000 -- to Stan and sign an agreement not to compete.
"Neither alternative presents a viable option for Quickflix," the company said.
"In the first instance, Quickflix does not have the funds to make payments to Stan, nor does the company believe it can raise funds from investors for that purpose.
"Neither alternative leaves Quickflix in a position to fund its unsecured creditors, nor with capital necessary to take the business forward."
Stan, a joint venture of Nine Entertainment and Fairfax Media, took ownership of the Quickflix RPS in July 2014, when Nine acquired the shares from HBO for an undisclosed amount. HBO had been issued the RPS by Quickflix in March 2011 during their AU$10 million commercial deal.
Stan's RPS, though legally an equity, are recorded as debt due to accounting standards.
RPS outrank ordinary shares in terms of dividends and capital returns, meaning Quickflix could not attract investors. Due to its plummeting customer numbers and declining sales, Quickflix also could not fund redemption.
Quickflix CEO Stephen Langsford had previously told ZDNet that Quickflix had lost so much ground to its competitors that it is turning its focus towards launching into the technology and ecommerce service sectors.
Quickflix experienced repeated customer losses during 2015 following the launch of Netflix Australia and the entry of local streaming services Stan and Presto. This was exacerbated by Optus and iiNet offering unmetered access to Netflix, with Optus also providing unmetered access to Stan.
Quickflix announced in early April that it would be shuttering its Sydney CBD and Auckland offices and making 15 percent of its staff members redundant as a result, adding that it would also "insource" its customer care and support, reduce costs in its Perth office, trim down its delivery network charges, and get one board member to step down.
Quickflix also dumped 20 percent of its workforce in October to attain AU$1.7 million per annum in cost savings, with another AU$2.3 million per annum in savings achieved by adjusting the company's content management, tech development and infrastructure, corporate overhead, call centre support, and marketing processes.
The company then successfully restructured debts of over AU$7.5 million by signing deals with several "major" studios.
Quickflix's buyout follows news earlier on Tuesday that fellow Australian SVOD service Presto, a joint venture between Seven West Media and pay TV provider Foxtel, has been fully acquired by the latter, with Presto customers to be moved across to the Foxtel Play streaming service as of December.
Presto will cease operations at the end of January; however, Seven and Foxtel have signalled their intent to continue partnering on content production into the future.
The ownership of Presto first came under question in September last year, after the Australian Competition and Consumer Commission (ACCC) released its Statement of Issues on its possible joint ownership by Ten Network and Foxtel, with Foxtel in return potentially acquiring part of Ten.
Under the deal, approved last October, free-to-air TV network Ten acquired 10 percent of Presto, while pay-TV provider Foxtel acquired 15 percent of Ten itself.