mm2 Asia says voluntary liquidation of Cathay Cineplexes unlikely to affect operations

[SINGAPORE] Entertainment company mm2 Asia on Wednesday (Sep 3) said the voluntary liquidation of Cathay Cineplexes is not expected to adversely impact its core businesses or continuing operations. 

Instead, liquidating the struggling cinema chain may improve the group’s overall cash flow and profitability, given that Cathay has been cash-flow negative and loss-making since the pandemic, said mm2. 

This was in response to queries raised by the Singapore Exchange regarding the creditors’ voluntary liquidation of Cathay, which was announced earlier this week. Shortly after, the cinema chain – which owes money to the landlords of several of its outlets – ceased operations. 

In a bourse filing on Wednesday night, mm2 explained that Cathay’s weak financial performance was already consolidated and publicly disclosed. 

Its core content business continued to perform strongly, contributing S$109.8 million in revenue in FY2025, the group noted. Earnings before interest, taxes, depreciation and amortisation came in at S$24.7 million, supported by diversified demand across Singapore, China, Taiwan, Hong Kong and Malaysia. 

The mainboard-listed company added that it has had “positive negotiations and ongoing engagement” with creditors, including on the deferral of its exchangeable bonds’ maturity date. 

It is also well-positioned to capture “expected continued growth” in the event and concert segment, despite the net loss it registered in FY2025, thanks to its strategic stake in live event and concert organiser UnUsUal. 

Fundraising initiatives, including a proposed placement of nearly 1.9 billion new shares, are under way as well, said mm2. In July, the group proposed placing the shares at a minimum of S$0.008 apiece, to raise funds for debt repayment and working capital. 

If the shares are fully subscribed at the minimum price, mm2 will raise S$14 million in net proceeds. Of this, S$7.5 million will be used to repay debt and liabilities, with the remaining used for general working capital. 

The group said that since Cathay’s liquidation does not constitute a material adverse change under the placement agreement, it will remain valid. 

However, the proposed placement is non-underwritten, and is being undertaken on a best-endeavour basis, mm2 said. Its completion will be dependent on various factors, including, but not limited to, the conditions precedent under the placement agreement, and the placement agent’s bookbuilding exercise. 

The cut-off date for the satisfaction of these conditions is Sep 30.  

In view of its circumstances, mm2 has appointed a chief restructuring officer to work with management and the board on overall strategic and financial plans. The proposed placement will remain a key component of that, the group said. 

“(But) it is likely that the timeline of the proposed placement will be delayed to accommodate the development of the strategic and financial plans.”

Fees owed to Disney

In a separate bourse filing on Wednesday, mm2 said two of its subsidiaries in Malaysia have received letters of demand from Disney, for payment of around RM1.2 million (S$374,711) in total. 

The sum is allegedly for film licence fees owed since November 2023 for movie screenings in Malaysia. 

Consequently, the two subsidiaries – mm2 Star Screen and mm2 Screen Management – have not screened Disney films since June 2024. 

The boards of mm2 and the subsidiaries are reviewing the letters and seeking legal advice. They intend to “actively engage” with Disney to resolve the matter. 

Shares of mm2 Asia closed flat on Wednesday at S$0.003, before the news.