Banks and landlords are pounding on the door. Can mm2 Asia survive the siege?
It has been a difficult year for the group, whose Cathay Cineplexes unit is already in voluntary liquidation
[SINGAPORE] Mired in debt and facing insolvency, mm2 Asia is experiencing its annus horribilis.
This year, its iconic Cathay Cinexplexes unit shuttered under millions of dollars in debt; and now, the entertainment group itself is facing existential threat as banks join landlords in issuing “pay up or else” letters of demand.
The company – which produced local blockbusters such as Ah Boys to Men and I Not Stupid 3 – diversified into multiple entertainment sub-sectors, but all that is now unravelling.
To stave off immediate winding-up by banks and creditors – the group has borrowings of over S$200 million due within a year – mm2 Asia has suspended trading of its shares and filed a High Court moratorium that could prohibit winding-up resolutions from being passed for four months.
The Business Times traces the rise and fall of mm2 Asia – from its formation, listing, acquisition of Cathay to disruption by new players.
Origins
2008: Melvin Ang, a former Mediacorp managing director and executive adviser of media and entertainment conglomerate Media Prima, sets up mm2 Entertainment to produce and distribute Chinese-language television programmes and movies in Malaysia and Singapore.
2009: The company moves its headquarters to Singapore and mm2 Singapore and mm2 Malaysia are incorporated to tap into the regional market.
2010: mm2 Entertainment distributes and produces its first few films: Phua Chu Kang The Movie, Old Cow vs Tender Grass and Love Cuts.
2014: In December, mm2 Entertainment lists on the Catalist board as mm2 Asia with a placement of 37.4 million shares at S$0.25 each, valuing the company at S$51.8 million. It has a 2013-14 net earnings of S$2.7 million.
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Acqusitions and subsidiaries
2015: Company buys 51 per cent of visual effects (VFX) and post-production house Vividthree Productions.
It also acquires two cinema businesses and assets from Cathay Cineplexes in Malaysia. In December, it snares a 70 per cent stake in video-on-demand company mm2View.
2016: Starhub takes 9.1 per cent of mm2 Asia for S$18 million. In July, mm2 buys more cinemas in Malaysia.
In August, it acquires a 51 per cent stake in event production and concert promotion company Unusual Group.
The company splits its stock for the second time in October – this time on the basis of one share into two.
In November, mm2 incorporates mm2 Entertainment USA in California. It also agrees to buy 13 cinema businesses and assets in 13 locations in Malaysia from Lotus Fivestar Cinemas.
2017: In February, subsidiary mm2 International sets up in Shanghai. The next month, mm2 Asia acquires the rights to reality singing show The Voice in Singapore and Malaysia.
In April, Unusual lists on the Catalist, raising S$17.4 million. StarHub then increases its mm2 Asia interest to nearly 10 per cent in July after investing an additional S$15 million.
In August, mm2 Asia upgrades to the mainboard.
One of its largest moves happens in November, when it buys Cathay Cineplexes for S$230 million. The deal includes eight cinemas with 64 screens. This acquisition follows a failed bid for 50 per cent of Golden Village.
2018: In March, mm2 Asia announces a tie-up with BT’s then-parent Singapore Press Holdings to build a lifestyle, entertainment and news portal under the AsiaOne brand.
Bruneian Prince Abdul Qawi and Osim founder Ron Sim in April team up to buy a substantial stake in Unusual for S$25.8 million. Sim’s R3 Asian Gems fund later that month also puts up S$2 million to be a pre-listing investor in Vividthree.
Vividthree lists on the Catalist in September with a market capitalisation of about S$84 million.
The Covid impact
2020: In April, as the Covid-19 pandemic brings the world to a halt, mm2 Asia launches a free-to-use video streaming service called mPlay Asia. It debuts in the key Chinese-speaking markets of Singapore, Malaysia, Taiwan and Hong Kong.
With the cinema business crushed by the pandemic and disruption from content-streaming apps, mm2 Asia in December proposes to merge its Cathay Cineplexes, Mega Cinemas and Lotus Fivestar brands with Golden Village cinemas.
2021: In July, mm2 Asia’s independent auditor notes a material uncertainty regarding the group’s ability to continue as a going concern, due to its latest losses and liabilities exceeding its asset value.
Just a month later, it enters into a deal to sell its cinema business for S$84 million to local investment firm Kingsmead Properties.
2022: The Kingsmead deal falls through in January. The same month, the window for its merger with Golden Village also lapses.
The first signs of real trouble emerge in June that year, when Cathay Cineplexes ceases operations at its iconic The Cathay outlet at 2 Handy Road. Its space becomes a pop-up outlet for independent cinema operator The Projector from August, which itself shutters three years later.
July also saw mm2 Asia’s going concern flagged again, with the auditor citing the group’s current liabilities.
In September, it enters into a bond subscription agreement with brokerage UOB Kay Hian for a S$54 million bond deal that is exchangeable for shares of mm2’s cinema business, mm Connect.
2023: All of Unusual’s equity held by mm2 Asia is transferred to a new wholly owned subsidiary, mmLive, which promotes and organises concerts and other entertainment acts.
Cathay Cineplexes moves out of Cineleisure in June, with the space then taken over by a tie-up between Golden Village and The Projector.
In September, mmLive invests HK$19 million (S$3.3 million) of exchangeable bonds issued by Hong Kong concert organiser Unipact Entertainment and Productions to enhance its live entertainment presence in Asia.
In November, mm2 Asia files notice of three straight years of losses as it struggles to recover from the pandemic.
2024: In August, mm2 Asia proposes a S$30 million share placement, with an option to issue additional S$10 million of placement shares. Sim’s V3 group intends to subscribe to at least S$15 million of the placement.
Debtors come calling
2025: In January, Cathay Cineplexes receives letters of demand from landlords of two outlets seeking around S$2.7 million in monies owed.
The next month, mm2 Asia says it has paid back S$12 million owed to landlords, and that the remaining S$2.7 million is a quarter of the total sum owed to the two outlets’ landlords from Apr 1, 2020, to Jan 31, 2025.
Cathay’s outlet at West Mall closes for reinstatement works, just as the lease on its Bukit Batok shopping complex outlet expires.
In March, mm2 Asia says Cathay’s Jem cinema is closing as Lendlease Global Commercial Real Estate Investment Trust (Reit) is terminating its lease. The Reit sought S$4.3 million in monies owed by Cathay Cineplexes.
Two months later, a S$1.7 million sale – or 21.02 per cent – of mm2 Asia’s 29.9 per cent stake in its subsidiary Vividthree was proposed.
Lendlease Global Commercial Real Estate Investment Trust in July then comes knocking to collect S$3.4 million for arrears.
A few days later, the entertainment group proposes a placement of 1.875 billion shares to raise about S$14 million in net proceeds.
From Jul 15 to 17, it receives S$3.3 million statutory demand from Frasers and Centrepoint Trust, proposes extending the repayment deadline of S$54 million in bonds maturing in December by six years and consider winding up Cathay Cineplexes.
In August, mm2 Asia says it has received eight letters of demand for a total of S$17.6 million outstanding, but could continue as a going concern.
Later that month, mm2 Asia’s second-half loss surges more than 10 times to over S$101 million as it writes off its cinema business, mm Connect. A few days later, as September rolls around, Cathay Cineplexes ceases operations and enters voluntary liquidation.
In the same month, mm2 Asia scraps a stake sale for private equity fund Hildrics Asia Growth Fund VCC, which instead takes 29 per cent of Vividthree in a direct share deal.
It then settles a RM1.7 million (S$530,000) dispute with another Malaysian landlord over unpaid rent and other charges for its movie theatres in Melaka and Johor, but one of its units receives another RM1.5 million payment demand from Antenna Entertainments.
Standard Chartered issues letters of demand to two associated companies, seeking repayment of over S$905,000.
Frasers Centrepoint Trust files a S$2.6 million claim against mm2 Asia after it guarantees lease obligations of its cinema unit at Causeway Point.
The largest payment demand comes on Nov 10, when UOB demands repayment of about S$74.6 million from the company and its subsidiaries. The sum is roughly three times the size of mm2 Asia’s S$26 million market value.
Later in the day, mm2 Asia seeks court moratorium that could prohibit winding-up resolutions from being passed for four months, as it pursues restructuring exercise.
The company’s board says mm2 Asia is unable to show it can continue as a going concern.
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