Faced with mounting million-dollar debts, Cathay Cineplexes’ operator, mm2 Asia, is considering several options, including shutting down all its cinemas, to address its ongoing financial concerns.

Other options include continuing negotiations with Cathay Cineplexes’ landlords to consensually restructure existing obligations, as well as pursuing a court-supervised scheme of arrangement to reorganise its debts while maintaining operations, the company outlined in a bourse filing today (July 17).

mm2 Asia, which is listed on the Singapore Exchange (SGX), expressed its commitment to continue operating its cinema business in the city-state, but it requires further support from landlords to do so.

“Such commitment requires the support from its landlords which has not been meaningful despite the difficult operating environment for cinemas and the wider retail industry over the past years caused by, amongst other things, the COVID-19 pandemic,” the company wrote.

Cathay Cineplexes has been facing headwinds as the appeal of cinemas continues to wane, and the headlines suggest that the chain may be approaching its final act. Here’s a look at the challenges it has faced and what brought it to this point.

An uphill battle

mm2 Asia, known as a movie production company, first acquired Cathay Cineplexes’ operations in 2017 for S$230 million. The move was made in a bid to complement its business and provide a “steady revenue stream” for the company.

However, the onset of COVID-19 shortly after proved to be devastating. It had almost killed several industries, and cinemas were arguably among the hardest hit.

In early 2020, they were forced to close for months and were only allowed to reopen later on with capacity restrictions. However, audiences never truly returned, as more began to embrace on-demand streaming services.

As a result, mm2 Asia suffered a net loss of S$22.4 million from January to June in 2020, after bringing in a profit of S$9.18 million in 2019 that same period.

To curb financial losses, the company made two key moves. The first was in 2020 when mm2 Asia announced talks for a potential merger with fellow cinema chain Golden Village. The deal fell through as it reportedly encountered several hurdles, including obtaining approval from shareholders and relevant government authorities.

This pushed the company to attempt another strategy in August 2021: selling its cinema business to Singaporean investment company Kingsmead Properties for S$84.8 million, with the proceeds to be used to settle its outstanding loans.

However, this deal also ultimately fell through due to uncertainty over the Omicron variant at the time. Kingsmead, instead, exchanged its S$6 million deposit for 75 million new mm2 shares.

Since then, Cathay Cineplexes has closed several cinemas over the years, including its Handy Road outlet in 2022. In 2023, it shut down the Cineleisure Orchard and Parkway Parade locations, and in 2024, its outlet at AMK Hub was closed.

Earlier this year, in a bourse filing dated February 3, mm2 Asia shared that Cathay Cineplexes received letters of demand on January 28 for approximately S$2.7 million in rent, along with other outstanding costs.

Melvin Ang, the founder of mm2 Asia, shared in an interview with CNA that the company was expected to give these monies by February 10, 2025, but was unable to meet the deadline. The company, at that time, was “in talks” with the landlords on a repayment schedule.

In addition, Ang also shared that while other businesses, such as F&B and karaoke, have bounced back after the pandemic ended, the same could not be said for cinemas. Apart from the rise of streaming platforms, strikes in the US by writers and actors in 2023 impeded blockbuster releases, further plummeting mm2’s revenue.

As the business attempted to restructure its operations, it had to prioritise certain payments in order to stay afloat.

“Pre-COVID, all our suppliers and partners got their money on time … but unfortunately, it has become so tough. We feel sorry to people that we owe money to. We will work harder to solve this problem,” he said.

Despite the rising costs and tight profit margins, Ang, at that time, expressed his confidence and optimism in the cinema’s staying power. “We’ve been managing (the situation) for the last few years, and we will continue to,” Mr Ang said to CNA. “At this point in time, we still want to push on.”

In an attempt to “save its screens”, Cathay Cineplexes started selling voucher sets of 10 movie tickets and 10 popcorn and water combos for just S$100 sometime in February, which are valid until the end of 2025.

Yet, the cinema chain still ended up shuttering its West Mall and JEM outlets this year, with the latter demanding payment of about S$3.45 million in rental arrears by July 22.

In total, six Cathay Cineplexes cinemas have closed in the last three years, leaving only four still in operation at Causeway Point, Century Square, Downtown East and 321 Clementi.

If that was not enough, Cathay Cineplexes sank further into debt upon receiving a fresh repayment demand of about S$7.6 million on Jul 9 to be repaid by July 28. The demand came from Linkwasha Holdings, a related entity of Cathay Organisation, concerning a S$30 million loan it had extended to mm2 Asia in 2017 to partially finance its acquisition of Cathay Cineplexes.

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mm2 Asia acquired Cathay Cineplexes as a move towards greater growth, but it now appears that the acquisition has become more of a burden than a boost, weighed down by shifting consumer habits and mounting financial pressure.

But it isn’t the only cinema operator to have faced headwinds. Between 2022 and 2024, four cinemas across Singapore shut their doors, leaving only six still in operation.

Given current trends, the future of one of Singapore’s longstanding cinema chains remains uncertain, and it may only be a matter of time before its curtains close.

• Read more stories we have written on Singapore’s current affairs here.

Featured Image Credit: Cathay Cineplexes