Helios And Matheson To Raise $164M Via A Bond Offering

Helios and Matheson Analytics, the provider of information technology (IT) services and the 92 percent owner of MoviePass, announced Thursday (June 21) that it is issuing $164 million in bonds and 20,500 shares of preferred stock.

In a press release, the MoviePass parent said the net proceeds from the offering and preferred stock will be used for general corporate purposes. The company said the notes will be convertible at a conversion price of $1, subject to adjustment. The preferred stock is not convertible into common stock. Each share of preferred stock is entitled to 3,205 votes per share.

The move on the part of Helios and Matheson comes as MoviePass’ stock has been under severe pressure recently as investors worry about a cash crunch at the company. Ted Farnsworth, head of Helios and Matheson, said the subscription service has enough cash to survive and thrive. In an interview with Variety, Farnsworth said MoviePass has around $300 million in an equity line of credit.

“There’s been a feeding frenzy of negativity, but it’s not going to slow us down,” said Farnsworth in the interview. “I’m not worried at all. You’re going to see. We’re doing more acquisitions of movies and companies.”

Citing public filings, Variety reported that MoviePass said it has $15.5 million in cash, which is lower than what it spends typically each month to fund ticket buying. Though Wall Street and investors are growing skeptical about the service that gives users free visits to the movies for a monthly subscription, Farnsworth is undeterred.

“We’ve got 17 months’ worth of cash without further raises of capital,” the executive told Variety.

One of its most popular subscriptions, its “see a movie for a day for $9.95 a month,” loses money because it pays theaters full price for the tickets — but in some cities, it costs $15 for a ticket. MoviePass is betting that users will see around two movies a month over time, thus making it money. AMC Theaters CEO Adam Aron said MoviePass users were going to movie theaters multiple times a month and that he was skeptical that customers of the service will reduce attendance to the levels MoviePass needs to stay profitable.