Audioboom, the podcast platform backed by Nick Candy, is on the verge of going bust after an acquisition and share placing fell through.
The company, worth just £33 million, announced in February that it was proceeding with a reverse takeover of US rival Triton Digital.
It said it planned to buy the share capital of Triton Digital’s parent company for £134 million.
However, Audioboom has now revealed it hasn’t been possible to complete the share placing which would have funded the acquisition.
As a result, it “requires further financing in the short-term for investment in additional podcasting content and working capital purposes”.
Audioboom issued convertible loan notes worth £1 million to Candy Ventures last month, but said given the commercial opportunities it has been working on in recent months “further equity funding will be required as soon as possible”.
The proceeds of the convertible loan notes will only provide the company with sufficient working capital for four weeks.
Audioboom said: “As a result, the company’s financial position remains uncertain pending the successful completion of the further equity funding. Therefore, the company has requested that its ordinary shares remain suspended from trading on AIM pending clarification over the company’s financial position.”
If sufficient funding is not found in time, the board might need to wind up the company, it added.
To make matters worse, Audioboom will have to pay a break fee to Triton of £700,000 as a result of withdrawing from the takeover. This has to be paid by 13 June, comprising £90,000 in cash and the rest in shares.
The deal would have given Audioboom, home of comedian Romesh Ranganathan’s Hip Hop Saved My Life podcast, access to the US market — reportedly worth $17.5 billion in annual advertising.
Rob Proctor, CEO of Audioboom, said: “Whilst the board is naturally disappointed that we were unable to raise the necessary funds to complete the proposed acquisition, I am pleased to report that our efforts to consolidate our customer base and attract more commercially viable podcasts are progressing well, with a growing proportion of our overall inventory being focussed on the lucrative in-read advertising space.
“The further reduction in the number of smaller, unsustainable podcasts on our platform will allow us to further reduce our monthly operating costs.
“Overall Audioboom continues to run a tighter, more compact operation, which will ultimately lead to a stronger more vibrant business. I look forward to updating shareholders in the near future with regards to the company’s proposed further equity fundraising.”
In April last year, Audioboom raised £4.5 million by selling shares to existing backer and property tycoon Nick Candy, and creative industry investor Edge Investments.
Audioboom initially raised £4 million the previous month through a share placing and subscription.
According its financial filings, Nick Candy’s investment vehicle, Candy Ventures, bought an extra eight million shares.
The audio start-up decided to convert the amount drawn down from a convertible loan note issued in January 2017 by Candy Ventures, giving Nick another 40 million shares and increasing his firm’s shareholding to 16%.