Cathay Cineplexes owner considering winding up cinema chain as it struggles with millions in debt

SINGAPORE – Cathay Cineplexes parent company, mm2 Asia, said on July 17 that it is evaluating all available options to address its financial challenges, including winding up the cinema chain.

Other options include continuing negotiations with Cathay’s landlords to restructure existing obligations consensually, and restructuring the cinema’s existing obligations under a court-supervised process while preserving operational continuity.

This comes after mm2 said on July 16 that it was proposing a six-year delay to a $54 million bond repayment.

It also faces demands for payment of rental arrears from landlords.

If mm2 opts to wind up Cathay Cinexplexes, it would result in the closure of one of Singapore’s oldest cinema chains. Originally known as Cathay Cinema, it has been operating since October 1939.

“The group has been committed towards the continued operation of its cinema business in Singapore,” said mm2 Asia.

“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 the last three years, leaving four still in operation at Causeway Point, Century Square, Downtown East and 321 Clementi.

Shares of the embattled company sank 28.6 per cent to 0.5 cent at market close on July 17.

mm2 Asia is seeking to extend a bond maturity by six years to Dec 31, 2031, with the bond holder, identified as Mr Tan Boon Seng, in a non-binding memorandum of understanding, the company said in a bourse filing late on July 16.

The move would allow mm2 Asia to avoid imminent default, while paying higher interest at 6 per cent per annum, from the original 5 per cent a year, it said.

“While the extension of the bonds’ maturity date will result in additional costs, including higher overall interest payable, it will enable the company to preserve cash that would otherwise be used for redemption in December 2025, and avoid the risk of defaulting on the redemption obligations under the terms of the bonds at that time,” mm2 Asia said.

The group’s cash position stood at $10.1 million as at Sept 30, 2024, based on its half-year financials released in November 2024.

In a separate bourse filing earlier on July 16, mm2 Asia said its cinema chain Cathay Cineplexes has received $3.3 million in repayment demands from the cinema’s landlord at Century Square and Causeway Point.

Cathay Cineplexes has to pay the full $3.3 million or to secure or compound the sum to the reasonable satisfaction of the landlord of both premises, Frasers Centrepoint Trust, by Aug 5.

If the cinema chain fails to comply, it shall be deemed to be unable to pay its debts under the provisions of the Singapore Insolvency, Restructuring and Dissolution Act.

The landlord of its shuttered outlet in Jem shopping mall has demanded a $3.4 million repayment.

There is also a demand from Linkwasha Holdings asking for a repayment of $7.6 million by July 28. This is the outstanding amount from a loan of $30 million from Linkwasha in 2017 to finance mm2 Asia’s acquisition of Cathay Cineplexes from Cathay Organisation.

Future material developments will be accompanied by further announcements, mm2 Asia said in its July 17 filing.

THE BUSINESS TIMES

With additional information from The Straits Times