mm2 Asia inks sale and purchase agreement to sell cinema business for S$84.8m

MM2 Asia - which operates cinemas under the Cathay brand - has entered into a sale and purchase agreement with local investment firm Kingsmead Properties to sell its cinema business for S$84.8 million.

The deal will require shareholders' approval at an extraordinary meeting that will be convened, as well as approval from the regulators.

mm2 Asia's founder Melvin Ang said: "The cinema business has been a strategic part of the group's content creation and distribution business, but it has been affected by Covid-19. With this proposed sale, it will stabilise the group's financial situation and allow mm2 to continue to focus on the development and strengthening of core production content growing opportunities."

Singaporean Jasmine Foo Mei Ling is the sole shareholder and director of Kingsmead Properties.

Proceeds from the proposed deal will be used to pare down the group's borrowings, including convertible bonds due on Dec 31, 2021. The company expects to receive net proceeds of approximately S$67.34 million (after deducting all transactions costs and expenses).

The expected loss arising from the transaction will be approximately S$84.66 million, which represents the deficit of proceeds over the book value, based on the group's audited consolidated financial statements for FY2021.

In November 2017, mm2 Asia bought Cathay Organisation's eight cinemas across Singapore for S$230 million, which added to the 19 movie theatres it already operated across the Causeway. It looked to Cathay after Hong Kong's Orange Sky Golden Harvest Entertainment (Holdings) blocked an earlier bid by mm2 to take a 50 per cent stake in Singapore's Golden Village cinema business in a deal valued at S$184 million.

The counter closed at 5.7 Singapore cents on Monday, down 1.72 per cent or 0.1 cent.