mm2 Asia seeks to delay S$54 million bond repayment by six years

[SINGAPORE] Embattled entertainment group mm2 Asia has proposed to amend a S$54 million-bond deal that was set for redemption in December.

In a non-binding memorandum of understanding with its bondholder, identified as Tan Boon Seng, the struggling group is seeking to extend the bond maturity by six years to Dec 31, 2031. The move would allow mm2 Asia to avoid imminent default, while paying higher interest at 6 per cent per annum, from the original 5 per cent a year.

The group said in a bourse filing on Wednesday (Jul 16): “While the extension of the bonds’ maturity date will result in additional costs, including higher overall interest payable, it will enable the company to preserve cash that would otherwise be used for redemption in December 2025, and avoid the risk of defaulting on the redemption obligations under the terms of the bonds at that time.”

The proposed amendments would also give mm2 Asia control of the subsidiary mm Connect, which it had originally pledged as collateral. Under the amendments, the bondholder would be entitled to appoint one director to the board of mm Connect, and any proceeds arising from the sale of assets with mm Connect would be used to redeem the bonds.

The entertainment group said: “The company will be able to retain ownership and control of mm Connect, and the extended maturity date of the bonds provides a six-year (or longer) runway to explore strategic options and maximise the value of mm Connect’s businesses and assets.”

Under the proposed amendments, if mm2 Asia fails to fully redeem the bonds by the new maturity date, the bond maturity date could be extended by another two years, “with an extension amount of no more than 20 per cent of the original principal amount of the bonds until Dec 30, 2033”, subject to the prior written approval of the bondholder.

In a separate bourse filing on the same day, the group said its cinema chain Cathay Cineplexes had received an additional S$3.3 million in repayment demands from the cinema’s landlords at Century Square and Causeway Point.

These statutory demands follow the one on Jul 2 from the landlord of its shuttered outlet in Jem shopping mall, which asked for a S$3.4 million repayment. There was also a demand from Linkwasha Holdings dated Jul 9, asking for a repayment of S$7.6 million.

The group’s cash position stood at S$10.1 million as at Sep 30, 2024, based on its half-year financials released last November.

Nonetheless, mm2 Asia highlighted that the actual terms of the proposed amendments to the bonds, issued end-2022, will be negotiated and agreed upon later.

Shares of mm2 Asia closed Wednesday up 16.7 per cent, or S$0.001, at S$0.007, before the announcement.