MoviePass Backer Soars on Plan to Raise $100 Million in Funding

(Bloomberg) -- Helios & Matheson Analytics Inc. rose as much as 29 percent after announcing plans to raise $100 million to increase its investment in MoviePass, the all-you-can-watch cinema service.

The New York-based company, which agreed to buy a majority stake in MoviePass, is issuing the notes to provide the $9.95-a-month subscription cinema service with additional funds and for general corporate purposes, according to a statement Monday. Canaccord Genuity Inc. acted as sole placement agent for the notes, which will be convertible at $12.06 a share.

MoviePass needs money to build the service, which lets film fans attend a theater once a day for less than $10 a month. The company pays cinema owners full price for tickets -- about $15 each in some cities -- meaning it loses money on every sale. It plans to make up the difference by selling ads and possibly negotiating a cut of concessions from exhibitors.

Shares of Helios & Matheson soared to $11.22 at 12:40 p.m. in New York after trading as high as $12.49. Since the company announced its plan to buy a majority stake in MoviePass, the stock has jumped to a high of $38.86 from $2.67 and then retreated to as little as $8.85.

With the proceeds of the note sale, Helios & Matheson plans to pay MoviePass $5 million due under a promissory note. The company will also raise its stake to a majority by paying MoviePass as much as $20 million under a previously announced agreement. Funds may also be used to further increase Helios & Matheson’s MoviePass holdings.

To contact the reporter on this story: Rob Golum in Los Angeles at rgolum@bloomberg.net.

To contact the editors responsible for this story: Crayton Harrison at tharrison5@bloomberg.net, Bruce Rule

©2017 Bloomberg L.P.