Student-run fund preparing bailout plan for MoviePass, but it may be unwanted

Student-run venture fund Triton Funds will be putting forward a formal offer to provide MoviePass with capital to help it stay afloat, the fund’s co-founders told MarketWatch this week.

Triton has submitted a proposal to its attorneys at Cara Stone LLP to present to MoviePass, fund co-founder Nathan Yee said. In it, Triton proposes offering capital to help the company pay off its debts.

“We want to offer Mitch equity capital and a long-term debt solution,” he said, referring to MoviePass CEO Mitch Lowe.

Triton will also offer any other assistance it can, including millennial-focused advice from the fund’s student management team. Yee did not provide further details, though he said $25-million fund typically invests between $250,000 and $2 million in a company in which it sees potential.

Yee and co-founders Sam Yaffa and Yash Thukral told MarketWatch on Friday that after several failed efforts to engage MoviePass parent Helios and Matheson Analytics Inc. HMNY, -7.56%  , they intended to attempt a hostile takeover of the company, whose market value was $470,000 at the time.

But the La Jolla, Calif.-based fund has since softened its stance, with the founders saying their main concern is making sure MoviePass stays afloat and has the chance to thrive. Many of the students involved in Triton use the service, and Yee said they see enormous growth potential in the movie subscription model.

Yee said Triton had several conversations with Helios and Matheson’s chief innovation officer, Parthasarathy Krishnan, who helped convince the fund to abandon its takeover plans and focus on helping MoviePass instead. Krishnan could not be reached for comment.

But MoviePass’s Lowe dismissed Triton’s interest during an interview with MarketWatch on Wednesday, saying: “We are not in talks with them. There are other, larger media companies that have expressed interest in acquiring the company or partnering with us because they see the immense value of millions of members that are influenced by our promotion of what to go and what to see.”

Triton discussed its strategy for MoviePass in a video posted on YouTube on Monday, in which co-founders Yaffa and Thukral recommended the company remove surge pricing, make all newly released movies available to subscribers, improve customer service and zero in on subscribers who only go to the movies occasionally. MoviePass announced the next day a plan to keep its current monthly fee of $9.95, but cut subscribers’ film allowance to three movies a month. The company also said it would suspend surge pricing and the ticket verification process, which required users to snap and upload photos of each ticket stub.

Triton supports the new moves. “We are here to advocate for the shareholders, for Mitch’s dream of bringing people to the movies,” said Yee. The venture fund does not currently hold any investments in Helios or Matheson.

Yee, Yaffa and Thukral launched Triton Funds in April to give students a chance to get real-world, hands-on experience in investing in companies. The fund is run by students at the University of California, San Diego and Cal State University, Northridge, and has an advisory board that includes university faculty and alumni. The fund’s current portfolio consists of 20 companies, including in-airport food delivery startup AtYourGate, cybersecurity company Bravatek Solutions BVTK, +0.00% and blockchain-based technology company DigitalTown Inc. DGTW, +7.69% .

Helios and Matheson has been struggling for the past several months, burning through large sums of cash and turning to increasingly expensive borrowing. The company’s stock has plummeted, closing Thursday at just 7 cents, even after a 1-for-250 reverse stock split late last month that adjusted the price to $21.25.

Shares of Helios and Matheson shares have fallen about 100% year to date, while the S&P 500 SPX, -0.14%  has gained 7%.

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