Search

Merger of Cathay cinemas with Golden Village proposed as Covid-19 bites business - The Straits Times

SINGAPORE - Singapore-listed mm2 Asia has entered into a heads of 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 bring in 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 movie film distribution business and an online streaming business.

OSGH has 14 Golden Village cinemas here. The Hong Kong-listed company, previously 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 also give more financial and operating stability to mm2 Asia's cinema business given the challenges faced by operators since the Covid-19 outbreak, the Singapore company said in a filing with the Singapore Exchange (SGX) on Wednesday evening (Dec 9).

There has also been general disruption to the movie and cinema business with the advent of content streaming apps and the growth of video content on social media, mm2 Asia noted. The merger would therefore result in a stronger platform for the operation of the cinema business, it said.

The deal faces several regulatory hurdles, namely, approvals from both mm2 Asia and OSGH shareholders; and nods from SGX and the Hong Kong Exchange, as well as relevant government authorities, including the Competition and Consumer Commission of Singapore.

The heads of agreement will be terminated if the terms of the definitive agreements cannot be agreed upon, or the conditions of the proposed transaction satisfied, by Dec 31, 2021.

A week ago, mm2 Asia announced a possible spin off and separate listing of its cinema business on Catalist board. That spinoff is being proceeded with in parallel with the work on the proposed merger, the company said in Wednesday's announcement.

In the event that the separate listing is completed successfully, mm2 said the parties will discuss in good faith the basis on which the proposed merger and beefing-up of the combined business with new investors would take place, taking into account the listed spinoff business.

mm2 Asia also said the parties are still negotiating the financial terms, adding the the merger terms will be discussed based on financial year 2019 operating figures, subjected to mutually agreed adjustments.

For the six months ended June 30 this year, Golden Village's Singapore cinema business made a loss of HK$16.9 million (S$2.9 million) on 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 revenue of HK$401 million for the year-ago period.

mm2 sank to a net loss of $22.4 million for the half-year to Sept 30, from a net profit of $9.18 million in the year-ago period. This comes as revenue fell by 83 per cent year on year to $19.9 million, hurt by safe-management measures that limited operations in its core cinema and events businesses.

Shares in mm2 Asia closed up 0.2 cent or 1.3 per cent to 16 cents on Wednesday before the proposed merger announcement.

Let's block ads! (Why?)

Article From & Read More ( Merger of Cathay cinemas with Golden Village proposed as Covid-19 bites business - The Straits Times )
https://ift.tt/37W40uC
Business

Bagikan Berita Ini

0 Response to "Merger of Cathay cinemas with Golden Village proposed as Covid-19 bites business - The Straits Times"

Post a Comment

Powered by Blogger.