Bloomberg, citing a regulatory filing, reported Helios and Matheson will use $5 million of a $6 million loan to pay its processors. The loan was from Hudson Bay. According to the report, the service went down Thursday after processors halted clearing payments for MoviePass. On Friday (July 27) it said service in New York was restored, noted the report.
Under the terms of the loan from Hudson Bay Capital Management, the lender can demand repayment of more than $3 million on Aug. 1 and the remainder on Aug. 5. Proceeds from a stock sale must be used to pay back the loan, reported Bloomberg. If it doesn't pay it back, it faces a 15 percent annualized penalty until it pays back the money. If the payment is 48 hours late, the interest could jump to 130 percent, noted the report.
MoviePass said on Twitter Thursday (July 26) that it was “investigating an issue that is preventing users from checking in to movies.” It said in a later tweet that the issue “is not with our card processor partners.” Last week, Helios and Matheson announced it will institute a reverse stock split of its issued and outstanding common stock. In a press release, Helios and Matheson said that, at a special meeting of stockholders held on July 23, shareholders approved the one-time reverse stock split of its common stock, at a ratio of one share-for-two shares up to a ratio of one share-for-250 shares. Following the special meeting of stockholders, the Board of Directors approved the reverse stock split at a ratio of one-for-250. The stock started trading on the split-adjusted basis Wednesday (July 25).
“We believe this is an important step that will facilitate our access to capital over the next several years and enable us to implement our growth plans for MoviePass, MoviePass Films, and MoviePass Ventures, and will enable us to pursue potential acquisitions to grow our business,” said Ted Farnsworth, Chief Executive Officer and Chairman of Helios and Matheson, in the press release. “With greater access to capital, we expect to solidify our position as the Number One movie theater subscription service in the U.S. and continue to revolutionize the movie industry.”