SINGAPORE: The owner of Cathay Cineplexes on Thursday (Feb 6) said on Thursday (Feb 6) that the slow recovery of the cinema industry following the COVID-19 pandemic had affected its ability to make payments in a timely manner.
Mainboard-listed media company mm2 revealed earlier this week it had received letters of demands from the landlords of its movie theatres at Century Square and Causeway Point pertaining to about S$2.7 million (US$2 million) owed in rent and other costs.
Responding to queries from the Singapore Exchange (SGX), the board of mm2 Asia, which also operates Cathay Cineplexes, said in a bourse filing on Thursday it had received another letter of demand from Frasers Centrepoint Trust (FCT), which owns Causeway Point.
Cathay Cineplexes was asked on Tuesday to pay S$2,203,121.95 in rental arrears and other amounts to FCT, taking the total sum owed to both landlords to over S$4.8 million.
mm2 Asia said the outstanding amounts were "not in dispute" but its ability to pay its arrears on a timely basis had been hampered by the “slower-than-expected recovery of the cinema industry” arising from the COVID-19 pandemic.
However, the company is working on a payment schedule acceptable by all parties.
mm2 Asia added it is treating the letters with the "seriousness they warrant" and is actively engaging with the landlords to resolve the matter.
There has been no disruptions to the cinema business and operations continue as usual, it stressed.
Between Apr 1, 2020, and Jan 31, 2025, mm2 Asia said Cathay Cineplexes had paid about S$12 million in rental payments to the landlords, and the outstanding amounts represent 25 per cent of the total payment over this period.
This was in response to SGX's query on why the rental arrears and other amounts had not been paid to the landlords, after noting that mm2 Asia had reported S$10.1 million in cash and cash equivalents in the first half of its FY2025 results.
According to the board of mm2 Asia, the payments owed are not expected to have any "significant impact" on the financials of the company, nor would it trigger a default under Cathay Cineplexes’ other financial facilities.
As for the S$10.1 million in cash and cash equivalents, mm2 Asia said they were "not restricted or encumbered in any way", with a portion of the monies allocated for use in the group’s other businesses.
The company is engaging with the landlords, comprising Century Square LLP, Century Square's Management Corporation Strata Title and FCT, to work on a payment schedule acceptable by all parties.
"The company is of the opinion that it has sufficient financial resources to fulfil the claims under the letters of demand."
In response to SGX's query if the company could fulfil its payment obligations in the next 12 months, mm2 Asia said "the cinema business is still in the process of recovering from the impact of the COVID-19 pandemic on the movie industry".
"However, the cinema industry is expected to see a global rebound in 2025. The increased number of films in the line-ups of major Hollywood studios is expected to drive higher attendance and contribute positively to Cathay Cineplexes’ financial performance."
To bolster its financial position, mm2 Asia is in talks with various lenders for Cathay Cineplexes to secure short-term working capital loans.
The chain is also engaging with potential investors for investments in the cinema business, including exploring a potential divestment.
mm2 Asia is also working with various creditors to reschedule debt as it comes due, including a possible restructuring of Cathay Cineplexes' business and financial obligations.
"Upon the success of the foregoing actions and the positive business outlook, the board is of the opinion that the group will be able to continue as a going concern and meet its significant payment obligations over the next 12 months, including debt obligations under the agreed repayment schedule."
The company said it will make further announcements when there are material developments.
Shares of mm2 closed at S$0.011 on Thursday before the latest regulatory filing. They remained at S$0.011 by noon on Friday.
In June 2024, Cathay Cineplexes shuttered its business in AMK Hub, its fourth cinema closure in two years.
Outlets at Orchard Cineleisure, the Cathay Building and Parkway Parade have also shuttered.
Deadpool & Wolverine, the second biggest film last year, was a notable absence from Cathay Cineplexes' slate of films in 2024, along with other Disney offerings like Inside Out 2.
The chain did, however, acquire WE Cinemas' 321 Clementi outlet in October last year, with mm2 Asia's executive chairman Melvin Ang then saying the deal showed the "continued confidence in the cinema business and our steadfast belief that blockbusters will return to our screens soon".
Cathay Cineplexes currently has five outlets in Singapore. Besides Century Square and Causeway Point, the chain also operates movie theatres at Downtown East, West Mall and JEM.
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