Cathay Cineplexes operator mulls closing down its cinemas to address 'financial challenges'
Mm2 Asia, which owns and operates Cathay Cineplexes, said in a bourse filing on Thursday (Jul 17) that it is evaluating all available options to address its "ongoing financial challenges".
"The group has been committed towards the continued operation of its cinema business in Singapore," said mm2 Asia, which is listed on the Singapore Exchange (SGX).
"However, such commitment requires the support from its landlords which has not been meaningful despite the difficult operating environment for cinemas and the wider retail industry over the past years caused by, amongst other things, the COVID-19 pandemic."
Six Cathay Cineplexes cinemas have closed in around three years, leaving four outlets still in operation.
In February, mm2 Asia revealed that it had received letters of demand from the landlords of its Century Square and Causeway Point cinemas for S$2.7 million (US$2.1 million) that it owed in rent and other costs. The amount owed is now more than S$3 million.
This month, the landlord of Cathay Cineplexes' shuttered outlet at Jem shopping mall demanded payment of about S$3.45 million in rental arrears, while Linkwasha Holdings is seeking more than S$7 million in repayment.
Mm2 Asia borrowed S$30 million from Linkwasha Holdings in 2017 to finance the acquisition of Cathay Cineplexes from Cathay Organisation. The majority of the loan has been repaid, but Linkwasha Holdings has asked for the outstanding amount to be paid by Jul 28.
On Wednesday, mm2 Asia also announced that is has proposed to extend the repayment deadline for a S$54 million bond deal from December this year to Dec 30, 2031.
CATHAY'S AVAILABLE OPTIONS
With the difficult operating environment and the "recent receipt of various statutory demands", mm2 Asia said it is evaluating options, including three that it outlined.
The first is to continue negotiations with landlords with the aim of restructuring existing obligations consensually.
The second option is to seek a scheme of arrangement to restructure existing obligations under a court-supervised process while continuing operations, and the third is to pursue a winding up of Cathay Cineplexes.
In an exclusive interview with CNA in February, mm2 Asia's founder and executive chairman Melvin Ang said he was optimistic about the cinema business.
'I am still very passionate, and I want to continue to maintain and grow this business,' he said at the time, adding that the company wanted to "push on".
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