MM2 Asia’s cinema business lands strategic investor in S$54M bond deal

A film roll. Photo by Eric Terrade on UnsplashA film roll. Photo by Eric Terrade on Unsplash

MM2 Asia‘s cinema business landed a long-term regional strategic investor in a S$54 million exchangeable bond deal with warrants, the company said in a filing to SGX Thursday.

We thank our new strategic investor for their confidence and commitment to support our cinema business growth plans. We have a clear strategy to right-size the business, innovate our offerings and deliver value to our stakeholders and customers,” Melvin Ang, executive chairman of MM2 Asia said in the statement.

“The deal has come at an opportune time for us to build back stronger during this recovery phase; cinemas can now operate at full capacity since 26 April 2022 and blockbuster movies are filling seats close to pre-pandemic levels. We are on track for a full recovery,” Ang added.

The bonds, which will have a 5 percent coupon rate, will be exchangeable for shares of mm Connect, which holds the cinema businesses in Singapore and Malaysia, the filing said. The bonds also come with 250 million detachable warrants which carry the right for five years to subscribe for one new share of mm Connect at S$0.065 each, the filing said.

If the right to exchange the bonds is executed, the investor will receive new or existing mm Connect shares equivalent to 60 percent of mm Connect’s enlarged share capital, MM2 Asia said.

The notes have a tenure of two years, which will automatically extend for another year if the exchange right isn’t executed at the end of two years, the filing said.

If the warrants are fully exercised, the consideration would be S$16.25 million, the filing said.

MM2 Asia will use the proceeds of the issuance to refinance existing debts and liabilities and for working capital, the filing said.

The deal, which was arranged by UOB Kay Hian,  has included a S$5 million cash earnest deposit, MM2 said.