Chinese internet giant Tencent Holdings has confirmed it has purchased Malaysia-headquartered video streaming platform iflix’s content, technology and resources as it seeks to expand its international streaming platform WeTV across Southeast Asia.
“This is in line with our strategy to expand our international streaming platform, WeTV, across Southeast Asia and provide users with international, local and original high-quality content in a wide range of genres and languages,” Tencent said in a statement, responding to a DealStreetAsia query.
Through the purchase, WeTV will further extend its presence in the video streaming industry across Southeast Asia to reach a broader audience base within the region, the statement added.
Tencent’s confirmation comes hours after DealStreetAsia published a report that iflix told its employees that the Chinese company was acquiring its loss-making business.
Terms of the deal are not known, but pricing is expected to have valued iflix at a significant discount to what the company could have gotten from an initial public offering (IPO) before the COVID-19 pandemic soured investors on loss-making companies.
In an e-mail sent to employees on Tuesday, Tencent, on behalf of iflix, offered the platform’s workforce the option to transfer to the local unit of the internet giant with a June 25 deadline to accept the offer.
When contacted by DealStreetAsia, iflix declined to comment.
DealStreetAsia reported on June 10 that the platform was in talks with two potential acquirers, who were believed to include companies based in Greater China.
The troubled iflix was weeks away from a debt crisis. Holders of just over $47.5 million of convertible debt could have forced the company to repay them if the company is not listed by July 31. Two iflix co-founders — Catcha Group co-founders Patrick Grove and Luke Elliott — stepped down from its board on April 9, while distressed asset specialists Ryan Shaw and John Zeckendorf from Mandala Asset Solutions joined a month later.
According to a Bloomberg report, Tencent will not take on iflix’s debt.
As of September 2019, iflix had just $12.7 million of cash reserves, and the company estimated that it would only have enough capital for ongoing corporate and administrative overheads until November 30, 2019. iflix has not announced any additional funding since then.
The company recorded a net loss of $158.1 million in 2018 as its operations burnt through $25.5 million of cash, resulting in a net liability position of $68.6 million as of end-2018. That included $77.7 million of negative working capital.
iflix had raised over $360 million from investors including Fidelity International, Hearst Communications, EDBI and Liberty Global.