SINGAPORE (THE BUSINESS TIMES) - Entertainment group mm2 Asia on Wednesday (Dec 8) said it will pause the spin-off and listing of its cinema business on the Catalist board of the Singapore Exchange (SGX) as it likely does not comply with chain listing requirements.
The mainboard-listed company had sought SGX's clearance for the initial public offering (IPO) prior to submitting its pre-admission notification, but was advised that the proposed spin-off does not comply with requirements under Rule 210(6) of the listing manual, based on the company's representations and the group's financial information for the past three financial years.
Under the rule, SGX will normally not approve the listing of a subsidiary of a listed issuer if the assets and operations of that subsidiary are substantially the same as that of the listed issuer.
mm2 Asia had said on Aug 10 that it would pursue the Catalist listing of its cinema business - which operates under the Cathay brand - in parallel with its proposed sale.
The company on Aug 30 inked a non-exclusive sale and purchase agreement with local investment firm Kingsmead Properties to sell its cinema business for $84.8 million.
Cinemas have been badly hurt by closures and restrictions arising from the Covid-19 pandemic and mm2 Asia's cinema business was to be sold at an expected loss of $84.7 million, representing the deficit of proceeds over the book value.
In its Wednesday filing, mm2 Asia said it will not submit a pre-admission notification "at this point of time" and will revisit the IPO process in the future "if appropriate". In the meantime, it plans to look to continue developing its business and exploring other avenues to maximise shareholder value.
The company added that it will announce material developments on the proposed spin-off as and when appropriate.
The group's cinema business is currently conducted through its wholly owned subsidiary, mm Connect, and its subsidiaries. In December last year, mm2 had planned to spin off the business to allow it to be financially independent and raise funds for new growth opportunities without relying on the group.
mm2 Asia bought Cathay Organisation's eight cinemas across Singapore for $230 million in November 2017, adding to the 19 movie theatres it already operated across the Causeway. It looked to Cathay after its bid to take a 50 per cent stake in Singapore's Golden Village cinema business for $184 million was blocked by Hong Kong's Orange Sky Golden Harvest Entertainment (Holdings).
Shares of mm2 Asia closed at 5.2 cents on Wednesday, up 0.1 cent, or 2 per cent, before the announcement.
•With additional information from The Straits Times