Cathay Cineplexes in the news as mm2 mulls cinema Catalist spinoff

Singapore

MAINBOARD-LISTED mm2 Asia, the owner of Cathay Cineplexes, is evaluating a spinoff of its cinema business onto the Singapore Exchange's junior Catalist board.

mm2's cinema business is currently conducted through its wholly-owned subsidiary, mm Connect, whose units include Cathay Cineplexes in Singapore and Malaysia-based mm2 Star Screen and joint venture River Front Mega Cineplex, according to its 2020 annual report.

A spinoff would enable the cinema business to be "financially independent" and raise the funds required for new growth opportunities without relying on mm2, mm2 said in its Tuesday filing.

This would also "incentivise senior management personnel of the cinema business to deliver the best possible value to shareholders", it added.

mm2 has appointed United Overseas Bank and other professional advisers to advise on the proposed spinoff and listing.

Cathay Cineplexes was previously under Cathay Organisation Holdings, which listed on the SGX's Sesdaq board in 1999 via a reverse takeover, and subsequently delisted in 2006, with its offeror citing thin trading.

mm2 later bought Cathay Cineplexes for S$230 million in 2017. This transaction came after mm2 failed in its bid to acquire a 50 per cent stake in another Singapore cinema operator, Golden Village.

mm2's mulling of the spinoff comes as its cinema business was badly hit by Covid-19 restrictions. For the half-year to September, mm2 posted a net loss of S$22.4 million, against a net profit of S$9.18 million a year ago. Its cinema contributions fell to just S$3.6 million, from S$49.5 million in the year-ago period.

In September, mm2 launched an on-demand streaming service, Cathay CineHome, to complement the cinema business - a decision that the firm said was accelerated by the Covid-19 pandemic.

Shares of mm2 closed at S$0.157, up 1.29 per cent, on Tuesday before the announcement.