Cathay Cineplexes operator mm2 Asia to raise funds for debt repayment via proposed share placement

SINGAPORE – Media company mm2 Asia, which operates the Cathay Cineplexes cinema chain, has proposed the 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 all the shares are subscribed to at the minimum price, mm2 will raise $14 million in net proceeds. Of this, it will use $7.5 million to repay debts and liabilities, with the remainder to be used as general working capital.

The proposed placement is “part of the company’s ongoing efforts to strengthen its financial position” and will also improve its cash flow, mm2 said in a bourse filing on July 4.

The announcement comes after

Cathay received a $3.4 million payment demand

from the landlord of its shuttered Jem outlet.

The placement price will be set at 0.8 cent or the volume-weighted average price (VWAP) per share over the 30 days preceding the date of approval from shareholders, if the latter is higher.

The 0.8 cent minimum price is at a 14.3 per cent premium to the VWAP of 0.7 cent of the trades on July 4. The company’s shares had ended the day at the same price, down by 0.1 cent or 12.5 per cent.

If successfully placed, the 1,875 million shares will represent about 22.3 per cent of mm2’s enlarged share capital.

The company will next seek shareholders’ approval for the allotment and issuance of the placement shares at an extraordinary general meeting that is to be convened. The placement agent is UOB Kay Hian.

THE BUSINESS TIMES