Hollis Johnson/Business Insider
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Helios and Matheson, the parent company of MoviePass has hired a second firm to help it solicit and collect votes on a plan to reverse split its stock.
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The company, which has been losing hundreds of millions of dollars, now expects to spend $109,000 on proxy solicitors, which is more than 10 times what it planned to spend initially.
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The announcement is the latest sign that it's struggling to convince shareholders to back the proposal.
The parent company of MoviePass gave another indication Thursday that it's struggling to convince shareholders to back its plan to reverse-split its stock for the second time in four months.
Helios and Matheson, which bought a controlling stake in the subscription movie ticket service last year, has hired a second firm to help it collect investor votes, it announced in a filing with the Securities and Exchange Commission. The company hired Alliance Advisors and will pay the firm $60,000 plus expenses.
Helios and Matheson, which burned through $210 million in cash in just the first six months of this year, is now spending around $109,000 on two different firms to solicit shareholder votes. That's an unusually large amount of money. When the company prepared for a shareholder vote in July on its first reverse split, it only hired one proxy solicitation firm and expected to pay just $9,000 plus expenses. Apple, meanwhile, expected to spend only $15,000 on soliciting votes for its shareholder meeting earlier this year.
The movie ticket subscription company originally planned to spend just $9,000 soliciting votes for this vote too. But it announced earlier this week that the amount it would spend with its first proxy solicitor had risen to $49,000.
Company representatives did not immediately respond to an emailed request for comment.
Helios and Matheson has massively diluted shareholders
MoviePass' parent, which is in danger of having its stock delisted from the Nasdaq national market because it's been consistently trading at less than $1 a share, is asking investors to approve the reverse-split scheme to boost its share price. The company plans to trade investors one new share of its stock for anywhere from two to 500 current shares, with the expectation that its stock price will go up in reverse proportion to the reverse-split ratio.
But because the move will only affect the number of shares it has outstanding and not the total number it can issue, the split would have the effect of giving Helios and Matheson room to issue billions of new shares. The company's track record indicates it would be sure to take advantage of that.