THE S$2.7 million in rental arrears by Cathay Cineplex to the landlords of its two cinemas represents a quarter of the total payment it owed between Apr 1, 2020, and Jan 31, 2025.
The cinema chain, operated by mm2 Asia, has paid back S$12 million in rent owed to the landlords, said the mainboard-listed media company in a bourse filing on Thursday (Feb 6).
The company was responding to queries from the Singapore Exchange (SGX) on the letters of demand that Cathay Cineplex received for rent and other costs owed.
SGX asked why the rental arrears and other amounts have not been paid back to the respective landlords, despite mm2 Asia having reported S$10.1 million in cash and cash equivalents in its results for the first half of the year.
The media company was asked if the payment amounts were being disputed by Cathay Cineplex, and if the cash and cash equivalents were restricted or encumbered in any manner.
The group said that the amounts were not being disputed by the cinema chain.
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It also noted that the S$10.1 million in cash and cash equivalents were not restricted or encumbered in any way, adding that it allocated and deployed a portion of the monies for use in the group’s other businesses.
The slower-than-expected recovery of the cinema industry hampered Cathay Cineplex’s ability to pay its arrears on a timely basis, said the group.
It added that it is actively engaging with the landlords to resolve the matter, and will work on a payment schedule that is acceptable to all parties.
It has initiated negotiations with the various lenders for Cathay Cineplex to secure short-term working capital loans, and is actively engaging with potential investors for investments in the cinema business, including exploring a potential divestment.
The group is also working with various creditors to reschedule debt as it comes due, including but not limited to a possible restructuring of Cathay Cineplex’s business and financial obligations.
With these steps in mind, it does not expect the letters to have a significant impact on its financials.
Separately, mm2 Asia disclosed that it received a letter of demand from Frasers Centrepoint Trust, the landlord of its outlet at Causeway Point, on Feb 4 for the S$2.2 million in rent arrears owed by Cathay Cineplex. The letter was received in its capacity as a guarantor.
Shares of mm2 Asia closed 8.3 per cent or S$0.001 lower at S$0.011 on Thursday, before the announcement.
