(Bloomberg) -- The parent company of MoviePass paid back a $6.2 million emergency loan it took out last week to cover a cash shortage that had rendered it unable to honor subscriptions to its unlimited theater-visits service.
Helios and Matheson Analytics Inc. repaid Hudson Bay Capital Management, the company said in a filing dated July 31. The company said it wanted to use about $5 million of the loan to pay its processors after they stopped clearing payments for MoviePass last week, which had shut down the service. Shares of Helios and Matheson tumbled as much as 48 percent on Wednesday morning in New York.
Read more: MoviePass Raises Prices as It Struggles to Survive Cash Drain
MoviePass, the subscription theater service that originally offered daily movie admissions for around $10 per month, has been draining cash quickly. The company announced a 50 percent price hike this week, as well as a limit on the availability of movies during the first few weeks after a release. The new price surge brings the monthly subscription to $14.95 and will take effect within 30 days.
Under the terms of the loan, Hudson Bay could have demanded repayment of more than $3 million of the loan today, with the rest due Aug. 5. In addition, Helios and Matheson would have been subject to a 15 percent annualized late fee until it made good on the loan. Had the company been 48 hours late, Hudson Bay could have required it to pay back the debt at 130 percent.
“We took a short term loan and we were happy we could pay it off early. The measures that we are implementing will allow us to keep the unique MoviePass community spirit while strengthening a viable business model you can all enjoy,” a representative for Helios and Matheson Analytics said.
--With assistance from Claire Boston.
To contact the reporter on this story: Vildana Hajric in New York at vhajric1@bloomberg.net
To contact the editors responsible for this story: Nikolaj Gammeltoft at ngammeltoft@bloomberg.net, Sally Bakewell
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