Cathay Cineplexes faces fresh S$7.6 million repayment demand amid deepening debt crisis

CNA

09-07-2025

SINGAPORE: The debt crisis surrounding Cathay Cineplexes appears to be worsening, with the emergence of a new debtor seeking about S$7.56 million (US$5.9 million) to be repaid by the end of this month.
In a bourse filing on Wednesday (Jul 9), mainboard-listed firm mm2 Asia, which owns and operates Cathay Cineplexes, said it had received a statutory demand from lawyers representing Linkwasha Holdings, a related entity of Cathay Organisation.
The demand concerns a S$30 million loan that Linkwasha extended to mm2 Asia in 2017 to partially finance the latter's S$230 million acquisition of Cathay Cineplexes from Cathay Organisation.
Mm2 Asia said it has been making repayments to Linkwasha over the years despite the pandemic's impact on its cinema business and the 'substantial debt burden' it took on to fund the acquisition.
It added that as of Jul 7, when the statutory demand was issued, it had 'repaid the majority of the loan, with the outstanding amount remaining at S$7,550,500 including interest'.
Linkwasha - formerly known as Orchard Bowling and Cathay Bowl, according to the Accounting and Corporate Regulatory Authority's Bizfile portal - has asked for the outstanding amount to be paid by Jul 28.
Alternatively, mm2 Asia can 'secure or compound the said sum to the reasonable satisfaction' of Linkwasha by the same date. But if it fails to do so, it will be deemed unable to pay its debt, according to the bourse filing.
The entertainment firm said it is seeking legal advice and intends to engage with Linkwasha to 'explore all available options whilst continuing to pursue various fund-raising exercises'.
This is not the only repayment deadline that the embattled cinema chain and its parent company are facing this month.
Lendlease Global Commercial REIT - the landlord of Cathay Cineplexes' shuttered outlet at Jem shopping mall - has demanded payment of about S$3.45 million in rental arrears by Jul 22.
The cinema chain's financial woes first surfaced in early February, when it revealed that it had received letters of demands from the landlords of its movie theatres at Century Square and Causeway Point for about S$2.7 million owed in rent and other costs.
At the time, Mr Melvin Ang, founder and executive chairman of mm2 Asia, said talks on a repayment schedule with both landlords were underway. In an exclusive interview with CNA, he also expressed optimism about the cinema industry, citing a strong slate of upcoming Hollywood releases expected to draw moviegoers back.
But later that month, Cathay Cineplexes announced the closure of its West Mall cinema, the same day its lease at the Bukit Batok shopping complex expired.
On Mar 27, it also shuttered its Jem outlet after receiving a notice of termination from the landlord to discontinue the lease.
The cinema business' ongoing struggles have taken a toll on the finances of its parent company. On May 19, mm2 Asia requested an extension to file its FY2025 financial results, annual report and other documents.
In an application made known via a bourse filing, the company cited reasons such as demands from landlords placing 'significant pressure' on its resources, which in turn delayed the closing of its books and timeline for audit completion.
It also faced difficulties making timely audit fee payments as the claims made by the landlords on bankers' guarantees, which added up to about S$2 million, 'required urgent settlement within a short period, creating unforeseen cash demands', mm2 Asia said.
The firm also disclosed then that the sum owed to various landlords for its cinema outlets had ballooned to about S$10.26 million, with around S$3.07 million backed by corporate guarantees issued by the company.
'These liabilities arose primarily from the closure of loss-making branches during the post-pandemic recovery period and the continued cash flow constraints affecting the cinema business,' mm2 Asia said in the May 19 bourse filing.
The firm has since been granted the extensions, including for its FY2025 earnings report, which it now must announce by Aug 28.
As part of efforts to strengthen its financial position and improve cash flow, mm2 Asia announced on Jul 4 a proposed placement of 1,875 million shares at a minimum of 0.8 cent per share, to raise funds for debt repayment and working capital.
If fully subscribed at the minimum price, the placement will raise S$14 million in net proceeds, of which S$7.5 million will be used for the repayment of debts and liabilities, and the remaining S$6.5 million set aside as general working capital.
Shares of mm2 Asia closed unchanged at S$0.007 on Wednesday.