SINGAPORE: The debt crisis surrounding Cathay Cineplexes appears to be worsening, with the emergence of a new creditor seeking about S$7.56 million (US$5.9 million) to be repaid by the end of this month.
In a bourse filing on Wednesday (Jul 9), mainboard-listed firm mm2 Asia, which owns and operates Cathay Cineplexes, said it had received a statutory demand from lawyers representing Linkwasha Holdings, a related entity of Cathay Organisation.
The demand concerns a S$30 million loan that Linkwasha extended to mm2 Asia in 2017 to partially finance the latter’s S$230 million acquisition of Cathay Cineplexes from Cathay Organisation.
Mm2 Asia said it has been making repayments to Linkwasha over the years despite the pandemic’s impact on its cinema business and the “substantial debt burden” it took on to fund the acquisition.
It added that as of Jul 7, when the statutory demand was issued, it had “repaid the majority of the loan, with the outstanding amount remaining at S$7,550,500 including interest”.
Linkwasha – formerly known as Orchard Bowling and Cathay Bowl, according to the Accounting and Corporate Regulatory Authority’s Bizfile portal – has asked for the outstanding amount to be paid by Jul 28.
Alternatively, mm2 Asia can “secure or compound the said sum to the reasonable satisfaction” of Linkwasha by the same date. But if it fails to do so, it will be deemed unable to pay its debt, according to the bourse filing.
The entertainment firm said it is seeking legal advice and intends to engage with Linkwasha to “explore all available options whilst continuing to pursue various fund-raising exercises”.
This is not the only repayment deadline that the embattled cinema chain and its parent company are facing this month.
Lendlease Global Commercial REIT – the landlord of Cathay Cineplexes’ shuttered outlet at Jem shopping mall – has demanded payment of about S$3.45 million in rental arrears by Jul 22.
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Cathay Cineplexes gets demand for S$3.4 million in unpaid rent for Jem premises
Cathay Cineplexes operator says it won’t give up despite financial struggles
The cinema chain’s financial woes first surfaced in early February, when it revealed that it had received letters of demands from the landlords of its movie theatres at Century Square and Causeway Point for about S$2.7 million owed in rent and other costs.
At the time, Mr Melvin Ang, founder and executive chairman of mm2 Asia, said talks on a repayment schedule with both landlords were underway. In an exclusive interview with CNA, he also expressed optimism about the cinema industry, citing a strong slate of upcoming Hollywood releases expected to draw moviegoers back.
But later that month, Cathay Cineplexes announced the closure of its West Mall cinema, the same day its lease at the Bukit Batok shopping complex expired.
On Mar 27, it also shuttered its Jem outlet after receiving a notice of termination from the landlord to discontinue the lease.
The cinema business’ ongoing struggles have taken a toll on the finances of its parent company. On May 19, mm2 Asia requested an extension to file its FY2025 financial results, annual report and other documents.
In an application made known via a bourse filing, the company cited reasons such as…
