SINGAPORE: The owner of Cathay Cineplexes said on Thursday (Feb 6) that the slow recovery of the cinema industry following the COVID-19 pandemic had affected its ability to make payments in a timely manner.
Mainboard-listed media company mm2 revealed earlier this week it had received letters of demands from the landlords of its movie theatres at Century Square and Causeway Point pertaining to about S$2.7 million (US$2 million) owed in rent and other costs.
Responding to queries from the Singapore Exchange (SGX), the board of mm2 Asia, which also operates Cathay Cineplexes, said the outstanding amounts were “not in dispute” but its ability to pay its arrears on a timely basis had been hampered by the “slower-than-expected recovery of the cinema industry” arising from the COVID-19 pandemic.
However, the company is working on a payment schedule acceptable by all parties.
It added it had received another letter of demand in its capacity as guarantor under the same lease, on Tuesday from Frasers Centrepoint Trust (FCT), which owns Causeway Point, requiring the payment of the sum of S$2,203,121.95.
This sum is part of the S$2.7 million owed to the landlords in rent and other costs.
Mm2 Asia added it is treating the letters with the “seriousness they warrant” and is actively engaging with the landlords to resolve the matter.
There has been no disruptions to the cinema business and operations continue as usual, it stressed.
A letter of demand, usually sent by lawyers, contains a list of demands. If the recipient – in this case, Cathay Cineplexes – does not meet these demands, legal action, such as a lawsuit, may follow.
PAYMENTS OWED NOT EXPECTED TO HAVE “SIGNIFICANT IMPACT” ON FINANCIALS
Between Apr 1, 2020, and Jan 31, 2025, mm2 Asia said Cathay Cineplexes had paid about S$12 million in rental payments to the landlords, and the outstanding amounts represent 25 per cent of the total payment over this period.
This was in response to SGX’s query on why the rental arrears and other amounts had not been paid to the landlords, after noting that mm2 Asia had reported S$10.1 million in cash and cash equivalents in the first half of its FY2025 results.
According to the board of mm2 Asia, the payments owed are not expected to have any “significant impact” on the financials of the company, nor would it trigger a default under Cathay Cineplexes’ other financial facilities.
As for the S$10.1 million in cash and cash equivalents, mm2 Asia said they were “not restricted or encumbered in any way”, with a portion of the monies allocated for use in the group’s other businesses.
The company is engaging with the landlords, comprising Century Square LLP, Century Square’s Management Corporation Strata Title and FCT, to work on a payment schedule acceptable by all parties.
“The company is of the opinion that it has sufficient financial resources to fulfil the claims under the letters of demand.”
