Hannover House Inc. (OTC:HHSE) Stock Rally After Debt Reduction News

As another trading week begins, investors are going to be watching those stocks that may have made considerable gains last Friday. One of the stocks that could be worth tracking this morning is that of Hannover House Inc. (OTC:HHSE). This past Friday, the stock was in prime focus following a key announcement and ended up with gains of as much as 13%.

The company announced at the time that it had managed to cut its debt load to $2.7 million from $6.4 million. It was a particularly major boost for the company considering that it had been making preparations for the launch of its new streaming business, titled MyFlix. In the news release, Hannover House noted that the debt reduction would also help the company produce feature films of higher profile.

Hannover House managed to bring down the debt load through not only payments of debts but also through reductions by way of negotiations. The reductions had been possible because of the ‘default judgments’ that had been incurred in the 2016–2018 period and that had been pursued by the Hannover House management under a faulty legal strategy. The management had ignored the out-of-state actions that had been filed by producers and had been allowed to go into default.

The management had done that since it believed that the contract disputes that were going to be filed in Arkansas would cancel out the defaults in other states. However, the strategy, which had been fashioned by the company’s president and attorney, Fred Shefte, proved to be faulty. That led to the burdening of the company with out-of-state defaults, which amounted to millions of dollars. The company noted that the cases lacked the factual basis for the claims that had been made.

The Chief Executive Officer of the company, Eric Parkinson, spoke about the developments as well. He noted that many distributors had been caught unawares by the fast collapse of the DVD market. The emergence of streaming had collapsed the DVD market entirely.

He went on to note that some of the program suppliers to the company had filed lawsuits against Hannover House and sought payments for the DVDs that had been shipped to the retailers but had been returned. The inability to respond to the lawsuit at an appropriate venue led to the company’s debt burden, Parkinson stated.

While the debt reduction was a major development for the company, on August 30, it announced that it was looking into financing and co-production incentives to take care of the bulk of the $80 million costs for two high-profile original productions. The two films are part of a three-film international slate, and one of those is ‘Mother Goose: Journey to Utopia’.

The company revealed that the film was going to be retitled Journey to Utopia’. Parkinson noted that as the company was moving into video streaming, it was going to explore the advantages of collaborating with funding entities and production companies all over the world.