[ad_1]
SINGAPORE – Singapore-listed MM2 Asia has entered into an agreement for the possible merger of its Cathay cinema business with Golden Village cinemas in Singapore, which is owned by Orange Sky Golden Harvest Entertainment (Holdings) Limited (OSGH).
As part of the deal, the two companies aim to attract new investors to inject more capital into the combined business, which would be the largest cinema operator here.
mm2 Asia owns eight cinemas in Singapore under the Cathay brand and 14 cinemas in Malaysia under the Cathay Cineplexes Malaysia, Mega Cinemas and Lotus Fivestar labels. It also owns a motion picture distribution business and an online streaming business.
OSGH has 14 Golden Village cinemas here. The Hong Kong-listed company, formerly known as Golden Harvest, operates a total of 35 cinemas with 285 screens in Hong Kong, Taiwan and Singapore.
A merger of the two cinema businesses would not only provide economies of scale, but would also bring more financial and operational stability to mm2 Asia’s cinema business given the challenges operators have faced since the Covid-19 outbreak, the company said from Singapore in a presentation to the Singapore Exchange (SGX) on Wednesday night (December 9).
There has also been a general disruption in the film and cinema business with the advent of content streaming apps and the growth of video content on social media, mm2 Asia noted. Therefore, the merger would result in a stronger platform for operating the movie business, he said.
The deal faces several regulatory hurdles, namely, approvals from mm2 Asia and OSGH shareholders; and assents from SGX and Hong Kong Exchange, as well as relevant government authorities, including the Singapore Competition and Consumer Commission.
Settlement heads will be terminated if the terms of the final settlements cannot be agreed, or if the conditions of the proposed transaction are met, before December 31, 2021.
A week ago, mm2 Asia announced a possible spin-off and a separate listing of its film business on the Catalist board. That spin-off is taking place in parallel with work on the proposed merger, the company said in Wednesday’s announcement.
Should the separate listing be successfully completed, mm2 said the parties will discuss in good faith the basis on which the proposed merger and reinforcement of the combined business with new investors would take place, taking into account the listed derivative business. .
mm2 Asia also said the parties are still negotiating financial terms, adding that the terms of the merger will be discussed based on the operating figures for the financial year 2019, subject to mutually agreed adjustments.
During the six months ending June 30 this year, Singapore’s Golden Village film business posted a loss of HK $ 16.9 million (S $ 2.9 million) in revenue of just HK $ 137.4 million due to circuit breaker measures, The Edge Singapore reported. This compares with operating profit of HK $ 70.6 million and HK $ 401 million revenue for the prior year period.
mm2 plunged to a net loss of $ 22.4 million during the half-year to September 30, from a net gain of $ 9.18 million in the same period last year. This comes as revenue fell 83 percent year-on-year to $ 19.9 million, impacted by safe management measures that limited operations at its core film and events businesses.
Shares in mm2 Asia closed up 0.2 cents or 1.3 percent at 16 cents on Wednesday before the proposed merger announcement.
[ad_2]
