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SINGAPORE: Media company mm2 Asia, which owns eight cinemas under the Cathay brand, announced on Wednesday (December 9) that it has signed an agreement for the possible merger of its cinema business with Golden Village cinemas in Singapore, owned by Entertainment for Orange Sky Golden Harvest.
The merger would make the combined business the largest cinema operator in Singapore.
mm2 Asia, a Singapore-listed company, also operates 14 cinemas in Malaysia under the Cathay Cineplexes Malaysia, Mega Cinemas and Lotus Fivestar brands.
Orange Sky Golden Harvest owns 14 Golden Village cinemas in Singapore and is listed on the Hong Kong Stock Exchange.
It would also provide “advantageous economies of scale” and more financial and operational stability for the mm2 theater business, given the challenges that theater operators face since the start of the COVID-19 outbreak, the company said in a filing with the Stock Exchange. Singapore.
There has also been “a general disruption in the film and cinema business, with the advent of streaming applications and the growth of video content on social media,” mm2 Asia said.
READ: Cinemas Expect To Increase Operational Capacity As COVID-19 Restrictions Ease
“The merger would result in a stronger platform for the operation of the cinema business,” he added.
Under the agreement, both parties hope to attract one or more new investors to inject capital into the merged business, which would also provide “additional working capital for the combined business to cover, among other things, its operating costs and strengthen the balance.” combined business sheet “.
OFFER NEEDS APPROVAL
The merger is subject to the approval of the shareholders of mm2 Asia and Orange Sky Golden Harvest Entertainment.
It also requires approval from the Singapore Stock Exchange and the Hong Kong Stock Exchange, as well as government authorities such as the Singapore Competition and Consumer Commission.
“If the terms of the Final Agreements cannot be agreed, or the conditions for the Proposed Transaction are met, before December 31, 2021, the Heads of Agreement will terminate and neither party will have any further rights or obligations under the themselves, “said mm2 Asia.
OPI LISTING
Earlier this month, mm2 Asia also announced plans for a possible spin-off of its film business through a listing on the Catalist board.
It is currently being carried out in parallel with work on the proposed merger, mm2 Asia said on Wednesday.
If the listing is successfully completed, mm2 and Orange Sky Golden Harvest Entertainment will discuss “in good faith the basis on which the merger and proposed transaction would take place, taking into account the derivative business listed.”
mm2 Asia also said that the two sides are discussing financial terms based on financial year 2019 operating figures, subject to mutually agreed adjustments.
