Beaten Down Stock Chicken Soup Entertainment Explores Financial Options to Avoid Cash Crisis

Chicken Soup for the Soul Entertainment Inc CSSE is exploring options to alleviate its financial difficulties. 

These include issuing preferred equity, raising new debt, and selling assets. 

The company has engaged with potential investors regarding the equity raise, though these talks remain confidential, Bloomberg reports. 

Despite considering these measures, Chicken Soup for the Soul has yet to make any official comments, and its primary lender, HPS Investment Partners, has yet to respond to inquiries.

Established in 1993 and expanding from publishing to film, television, video streaming, and pet food, the company ventured into the DVD rental kiosk and online streaming rental market by acquiring Redbox in 2022. 

However, the company’s financial stability has been precarious, with just $4.1 million in cash as of September 30 and facing the challenge of managing $360 million of debt from its merger with Redbox. 

The debt management strategy relied on increasing movie releases to pre-pandemic levels and anticipated cost savings.

The inability to secure a new loan last year meant missed opportunities to acquire movie titles, further impacting its performance. 

Despite the financial strain, the company tried reducing costs and renegotiating contracts with content providers. In January, it tapped FUEL TV for action sports-focused streaming content. In February, it collaborated with Swirl Films to relaunch FrightPIX as a streaming channel.

The company has also sought professional advice on asset sales and is discussing modifications to its existing loan terms. 

In December, the company reported third-quarter revenue of $65.7 million, missing the consensus of $102.1 million. The EPS loss of $(1.86) missed the consensus loss of $(1.17).

Amidst these challenges, Chicken Soup for the Soul’s stock has significantly plummeted, losing over 95% of its value in the past year, now trading at less than 19 cents per share.

Price Action: CSSE shares traded higher by 2.37% at $0.19 premarket on the last check Wednesday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Photo by Foto-Rabe from Pixabay