Taking one look at the chart, Helios & Matheson (HMNY 6.82, -3.26 -32.4%) may provide hope and dismay all in the same amount of computer pixels it takes to order last-minute holiday gifts. Looking back at early-to-mid October, investors hurried to catch up to a stock that was on a parabolic run – flash forward to today, and the stock sits firmly off those October-highs, yet still muscles-up to gains of better than 100% on the year. The stock surge was fueled by news in mid-August that HMNY had acquired a majority stake in the movie subscription pass company MoviePass, and whether you’ve landed on the right side or the wrong side of the HMNY trade, the ride sure has been an exciting one.
Moving then to news from last night after the bell; HMNY announced an offering of common stock and warrants with no amount specified. The company did specify, however, that it intends to use the net proceeds from the offering to increase the company’s ownership stake in MoviePass or to support the MoviePass operations; to satisfy a portion or all of the amounts payable in connection with its outstanding convertible notes, to the extent that they remain outstanding; and for general corporate purposes.
Further, HMNY announced that Canaccord Genuity would be acting as sole book-running manager and Maxim Group LLC is acting as co-manager for the offering.
Then this morning HMNY clarified the pricing of the underwritten public offering of an aggregate of 8,261,539 Series A units, with each Series A Unit consisting of (i) one share of the company’s common stock, par value $0.01 per share, and (ii) one Series A Warrant to purchase one share of Common Stock; and (B) 969,230 Series B units, with each Series B Unit consisting of (i) one pre-funded Series B Warrant to purchase one share of Common Stock and (ii) one Series A Warrant, with anticipated gross proceeds of about $60 million, before deducting underwriting discounts and commissions and estimated offering expenses payable by HMNY.
HMNY is offering the Units at a price of $6.50 per Unit. Further, all of the Units are being offered by HMNY. Also, the shares of Common Stock and the Warrants will be issued separately and the Series A Warrants will be initially exercisable on the first trading day following the one year anniversary of the date of issuance and will expire five years from the date such Series A Warrants are first exercisable at an exercise price of $7.25 per share. The Series B Warrant will be exercisable at any time on or after the issuance date until the five-year anniversary of the date of issuance.
Lastly, there is no established public trading market for the Warrants and HMNY does not expect a market to develop in the future. The offering is expected to close on or about December 15, 2017, subject to customary closing conditions.
Looking back at the chart again, it’s no secret why HMNY’s stock is lower this afternoon, as the offering price of $6.50 per Unit is quite the discount to yesterday’s close of $10.08. HMNY will likely have no problem getting what they need out of the offering, as many on the Street are chomping at the bit to be invested in the company that is shaking up the movie ticket biz.