Window for merger between mm2's Cathay and Golden Village cinemas lapses

Cathay owner mm2 Asia said that the long-stop date of the agreement for the potential deal lapsed on Dec 31. PHOTOS: KELVIN CHNG, ST FILE

SINGAPORE (THE BUSINESS TIMES) - A merger of the Cathay Cineplexes and Golden Village cinema businesses appears to be off the cards. In a bourse filing on Friday, Cathay owner mm2 Asia said that the long-stop date of the agreement for the potential deal lapsed on Dec 31.

The update comes days after mm2 announced that its planned sale of the cinema business to local investment firm Kingsmead Properties had fallen through, due to uncertainty over the Omicron variant. Kingsmead will instead exchange its S$6 million deposit for 75 million new mm2 shares.

Prior to the Kingsmead deal, back in December 2020, mm2 announced that it had entered into a heads of agreement with Golden Village's Orange Sky Golden Harvest Entertainment (Holdings) for a possible merger.

mm2 had then said that the combined entity would be the biggest cinema operator in Singapore, achieving economies of scale. The company's mm CONNECT unit owns eight cinemas in Singapore under the Cathay brand, and a dozen-odd in Malaysia, said its latest annual report.

That same month, mm2 had also said that it was evaluating a spin-off of its cinema business onto the Catalist board, to enable it to be financially independent.

Subsequently, in July last year, mm2 disclosed a non-exclusive binding term sheet with Kingsmead to sell at least 80 per cent of the cinema business for between S$80 million and S$120 million. mm2 later said that the potential sale would run in parallel with the proposed Catalist listing.

But in December last year, mm2 said that it would pause the spin-off plan, as it likely does not meet chain listing requirements. SGX will usually not approve the listing of a subsidiary of a listed issuer if the assets and operations of that subsidiary are substantially similar.

In its Friday filing, mm2 said that it will continue to "explore new avenues to maximise stakeholder value". Shares of the company closed at S$0.051 on Friday, down 1.92 per cent.

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