SeaChange opts to delist stock, go it alone

SeaChange, a video and ad-tech specialist whose heritage goes back to the early days of cable video-on-demand (VoD), said it has made a voluntary decision to deregister its common stock from the Nasdaq market and effectively go it alone as a private company.

SeaChange said it intends to file for its delisting with the Securities and Exchange Commission (SEC) on or about August 18, 2023.

The decision comes roughly eight months after SeaChange's board initiated a process to explore "strategic alternatives" aimed at maximizing stockholder value. The alternatives explored included a possible sale, merger, divestiture and recapitalization. SeaChange noted that it had also looked at "potential bolt-on acquisitions."

SeaChange said it ultimately found that the proposals it did see undervalued the company, citing "a wide dislocation between the market's perception of SeaChange's value and the Company's intrinsic value." That led to the current standalone plan, which SeaChange believes will generate more value for stockholders in the long term.

Tough sledding against private companies

"In essence, the value of the Company basically mirrors its cash balance alone, and attributes minimal value to the Company's operations," SeaChange President and CEO Peter Aquino said in a statement. "It is clear, in my opinion, that this perceived stagnation in our public stock price and lack of scale, which we aimed to fix through M&A, has made it extremely difficult to transact on a level playing field with private companies in our industry."

At last check Tuesday, SeaChange's market cap stood at $12.08 million, below the $15.2 million of cash and cash equivalents the company reported at the end of its most recent fiscal quarter.

Tuesday's decision to delist the stock led to a sell-off. SeaChange shares dropped $3.19 (-40.6%) today, closing at $4.67 each. The company initiated a 1-for-20 reverse stock split in May 2023.

SeaChange said its board considered that the company's common stock might be hard to sell before the delisting becomes effective. As such, the company now expects that its common stock will be quoted on the OTC Expert Market.

"No guarantee, however, can be made that a trading market in the Common Stock in any over-the-counter market will be maintained," the company warned.

But SeaChange expects that the voluntary delisting from Nasdaq and "going dark" will save money it can use to execute the standalone plan. The company said it expects the move to save more than $3 million annually in part by eliminating accounting and other expenses related to maintaining its status as a public company. It intends to reinvest that into new products and services and focus on achieving positive cash flow.

Prior to the process to seek out strategic alternatives for the company, which was initiated in December 2022, SeaChange had sought suitors off and on for several years and went through several leadership changes along the way. Aquino, a former RCN, AT&T and Bell Atlantic exec, was appointed president and CEO of the company September 2021.

Merger scrapped in 2022

SeaChange almost pulled off a merger a few months after Aquino came on board. In December 2021, the company struck a merger with Triller Hold Co., a developer of short-video apps and content for social media platforms. That proposed deal called for the companies to execute a "reverse merger" that would enable privately listed Triller to go public by taking over publicly traded SeaChange.

It was not to be. About six months later, the companies said they mutually agreed to nix the deal after determining they would fail to close it prior to a set termination date. They opted not to seek an extension.

Focus on streaming

SeaChange cut its teeth on VoD servers and back-office systems and was a key player in the early days of cable VoD. It later got into the ad-tech business with a blend of cable and telco partners that included operators such as Liberty Global. Its big focus of late is StreamVid, a new cloud-based, software-as-a-service product, and the broader streaming market including free, ad-supported TV (FAST) services.

One significant result of that focus surfaced in February, when SeaChange announced that its StreamVid platform is being used to help power VIDAA Free, a FAST service for connected TVs (primarily models from corporate cousin Hisense) that use the VIDAA operating system.

In fiscal Q1 2024 financial results issued in June, SeaChange posted total revenues of just $7 million, down 31% from the year-ago period. About 78% of that total was tied to service revenue, and the rest derived from product revenues.

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— Jeff Baumgartner, Senior Editor, Light Reading