[SINGAPORE] Struggling cinema chain Cathay Cineplexes will wind down business operations at its Jem outlet in Jurong East on Thursday (Mar 27).
This follows the closure of its West Mall cinema on Feb 20, the same day its lease at the Bukit Batok shopping complex expired, after news that the cinema owed millions to landlords broke earlier that month.
Closure of the Jem theatre comes as the outlet’s landlord, Lendlease Global Commercial Real Estate Investment Trust (Reit), issued a notice to terminate the lease with the embattled cinema chain with effect from Thursday, said mm2 Asia, which operates Cathay.
“In view of the challenges facing the cinema industry since the onset of Covid-19, Cathay Cineplexes will cease operations in Jem shopping mall effective Mar 27, 2025. This is a result of ongoing negotiations with the landlord for more than a year,” said mm2 Asia on Thursday.
While the cinema has been “actively engaging” its landlord to negotiate and resolve issues related to the continued occupation of the Jem premises and rental arrears, Lendlease Global Commercial Reit has decided to terminate the lease, the mainboard-listed media company said.
It added that Cathay stays committed to post-Covid “rightsizing” and realigning of its business, which it has been doing for the past two years.
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“The painful process is inevitable but will allow the cinema to explore new opportunities based on current market demands and ensure long-term sustainability. The chain will also continue to explore innovative ways to enhance the cinema-going experience and diversify its entertainment offerings to meet evolving consumer needs,” said mm2 Asia.
Lendlease Global Commercial Reit is seeking to recoup some S$4.3 million in rental arrears that Cathay owes, among other things, up to the termination date.
The cinema chain will continue working with its landlord to settle its outstanding debts, mm2 Asia said.
It said: “Cathay would also like to thank Lendlease for their support over the years throughout the Covid-19 period and post-pandemic, during which the cinema business had seen significant challenges and unprecedented difficulties.”
The company added that it would make further announcements in the event of any material developments.
It urged shareholders to exercise caution when dealing with its shares and to refrain from taking action potentially “prejudicial to their interests” in relation to the shares.
Delayed rental payments
On Jan 28, Cathay received letters of demand from landlords of its two cinema outlets – Century Square and Causeway Point – seeking S$2.7 million in alleged rent, legal costs and other monies owed.
The two outlets are located in the retail malls of Century Square in Tampines and Causeway Point in Woodlands, both of which are owned by Frasers Centrepoint Trust.
The landlord of its Century Square outlet asked for a total of S$479,185.74 in rental arrears and other monies, as well as S$893.80 in legal costs to be paid by Feb 10.
Separately, the landlord of its Causeway Point outlet asked for S$1 million to be paid to its trustee, HSBC Institutional Trust Services, by Feb 3, and for S$1.2 million to be paid by Feb 10. The sum comprises rental arrears and other monies. Cathay was also asked to pay the landlord S$555.90 in legal fees.
When queried by the Singapore Exchange in February on why owed funds had not been paid to the landlords although mm2 Asia reported S$10.1 million in cash and cash equivalents in its first-half financial results for FY2025, the group said it had deployed a portion of the monies for use in its other businesses.
The company added that the S$10.1 million in cash and cash equivalents were not restricted or encumbered in any way, and that the cinema chain was not disputing the payments.
Shares of mm2 Asia were down S$0.001 or 10 per cent at S$0.009 as at 10.15 am on Thursday.
