The financial challenges engulfing Cathay Cineplexes continue to intensify, as a new statutory demand has surfaced for a payment of approximately S$7.56 million by the end of July. This latest demand adds to a string of debt-related pressures confronting the cinema operator and its parent company, mm2 Asia Ltd.
In a regulatory filing on Wednesday, mm2 Asia—listed on the Singapore Exchange’s Mainboard—disclosed that it had received a statutory demand from legal representatives of Linkwasha Holdings. The creditor is a related entity of Cathay Organisation, which previously sold Cathay Cineplexes to mm2 Asia.
The demand stems from a S$30 million loan extended by Linkwasha in 2017 to partially finance mm2 Asia’s S$230 million acquisition of Cathay Cineplexes. Despite facing significant disruptions in its cinema operations due to the pandemic, mm2 Asia said it has been servicing the debt, and has since repaid the majority of the loan. As of 7 July, the outstanding balance stood at S$7,550,500, inclusive of interest.
Linkwasha, formerly known as Orchard Bowling and Cathay Bowl, has required repayment of the full amount by 28 July. Failing that, mm2 Asia must either secure or compound the debt to Linkwasha’s reasonable satisfaction by the same date. Non-compliance may result in the company being deemed unable to meet its financial obligations under Singapore’s insolvency framework.
The entertainment group has indicated that it is seeking legal counsel and plans to engage with Linkwasha to explore available options while continuing its ongoing fund-raising efforts.
The demand from Linkwasha comes amid a cascade of other repayment deadlines confronting the company this month. Lendlease Global Commercial REIT, the landlord of Cathay Cineplexes’ shuttered Jem outlet, is seeking S$3.45 million in rental arrears by 22 July.
These developments follow earlier revelations in February, when mm2 Asia disclosed that landlords of its Century Square and Causeway Point outlets had issued letters of demand for approximately S$2.7 million in unpaid rent and associated costs. At the time, Executive Chairman Melvin Ang said discussions regarding repayment arrangements were underway. He also conveyed optimism about the sector’s recovery, pointing to a promising pipeline of Hollywood releases.
Nevertheless, the financial strain has forced Cathay Cineplexes to reduce its footprint. In late February, the operator closed its West Mall outlet upon lease expiry. Its Jem location was also shuttered on 27 March following a termination notice issued by the landlord.
These closures and persistent cash flow difficulties have weighed heavily on mm2 Asia’s financial health. On 19 May, the company sought and was subsequently granted an extension to file its FY2025 financial statements and accompanying disclosures. The group cited intense resource pressure caused by creditor demands, which affected its ability to finalise its accounts and audit processes. It also highlighted difficulties in meeting audit fee obligations due to unexpected cash demands arising from landlord claims on bank guarantees, amounting to approximately S$2 million.
As at May, mm2 Asia reported total arrears to landlords of about S$10.26 million, of which approximately S$3.07 million was backed by corporate guarantees. The group attributed these liabilities to the closure of underperforming locations during the post-pandemic recovery and continued liquidity constraints within its cinema operations.
In a bid to reinforce its balance sheet, mm2 Asia announced a proposed placement of 1.875 billion new shares on 4 July at a minimum issue price of 0.8 Singapore cent per share. If fully subscribed, the placement is expected to yield S$14 million in net proceeds—S$7.5 million of which will be allocated to debt repayments, with the remaining S$6.5 million designated for working capital purposes.
Shares of mm2 Asia closed flat at S$0.007 on Wednesday.
-CNA
