Seeking new sources of cash, MoviePass parent Helios & Matheson Analytics has agreed to sell institutional investors some 333.3 million units of common stock and warrants.
In a press release, the company said the registered direct offering would close “on or about” January 16 and generate $5.4 million in proceeds.
Investors took the news as an inauspicious sign for the beleaguered company, sending shares down 15% on double their average trading volume, their biggest single-day decline in nearly a month. The stock price for months has been a bit more than a penny, meaning a potentially devastating de-listing by the Nasdaq (a common occurrence for stocks trading under $1 a share) may be in the offing.
Each “common unit” in the direct offering will cost $0.0163, the company said. The units include warrants to buy shares beginning six months after the date of the closing and lasting for either one or five years depending on the warrant.
Helios said it plans to use the net proceeds to redeem about $1.2 million in outstanding non-convertible senior notes issued last fall, plus paying fees to the placement agent and taking care of other transaction expenses. The company noted that if the warrants were to be fully exercised on a cash basis, the proceeds would be about $344.2 million — a life-changing windfall — though “no assurance can be given that any of the Warrants will be exercised.”
In December, the company announced another overhaul of its subscription pricing menu, which has gone through multiple changes in recent months. As of January 1, basic plans cost $10 to $15 a month depending on where a subscriber lives, and will keep certain new releases off limits. A middle tier at $15 to $20 middle tier removes restrictions on new releases, and a top-tier plan at $20 to $25 entitles subscribers to one 3D or Imax screening per month.
The original high-flier in U.S. subscription moviegoing, MoviePass has lately been eclipsed by rival offerings introduced in 2018 by top exhibitors AMC and Cinemark. Those companies have gained significant traction via subscriptions and are seen by Wall Street as having an easier time monetizing subscriptions than a third party like MoviePass. Because it can’t sell its subscribers popcorn or soda like the exhibition circuits, MoviePass has banked on its ability to use data collected from subscribers to fuel its film production and financing arms as well as selling that data to Hollywood stakeholders.