Netflix raises $400m to steady its global expansion
Movie rental firm taps investors for extra cash as it moves into Europe
Video rental firm Netflix, soon to be hitting the UK shores, has raised $400m in fresh capital from long-time investors to try to boost the firm after a tough few months.
The US company has dropped nearly 75 per cent of its market value since July, when it announced an ill-fated plan to split its DVD and streaming services and hike its prices while it was at it.
After a couple of months of withering criticism from the media and haemorrhaging subscribers, Netflix realised the error of its ways and dumped the whole Qwikster-DVD-spinoff idea for good, but the damage was done on the markets.
In a letter to shareholders outlining its third quarter results in October, the movie rentals firm said it had lost subscribers as a result of the moves, as well as damaging "our hard-earned reputation".
Netflix is now trying to get its feet planted firmly back on the ground as it takes on Lovefilm in the UK early next year, starting with a streaming-only service.
The firm grabbed the additional funds it needs from existing investors, signing a deal for $200m worth of convertible notes with Technology Crossover Ventures and affiliates.
That contract was dependent on Netflix managing to convince another investor to give it an additional $200m for stocks, according to an SEC filing, which it did in a deal with T Rowe Price Associates and affiliates.
"With this additional capital from two long-term oriented investors, we have strengthened our balance sheet and remain focused on growing our streaming subscriptions and returning to global profitability after our launch in the UK in 2012," David Wells, CFO, said in a canned statement. ®