Mini-conglomerate mm2 Asia says that a deal to sell its Singapore cinemas business has fallen through. The deal was announced in August and should have been completed by Dec. 31, 2021.

“Omicron uncertainty has dampened investing appetite for the moment. We hope to be able to revisit the acquisition again, and hopefully soon enough, when the Covid situation further eases,” said potential buyer Kingsmead Properties in a statement.

The privately held Kingsmead had originally agreed to pay S$84.8 million ($62.5 million) for an 80% controlling stake in the Cathay Cineplexes-branded unit. It paid a S$6 million ($4.43 million) deposit which it will now convert into 75 million newly issued mm2 shares instead.

“We welcome [Kingsmead] as valuable strategic shareholders,” said mm2 executive chairman Melvin Ang. “The Omicron effect on investing sentiments was sharp and unexpected. However, mm2 remains optimistic of the recovery of the cinema business as signs are indicating a trend towards recovery. And we definitely will still welcome any new proposal from Kingsmead in the future.”

Cathay Cineplexes reported that December 2021 was its best month since the start of the pandemic, and pointed to the pre-Christmas release of “Spider-Man: No Way Home,” as the determining factor. The Singapore cinema chain lost S$66.8 million ($49.3 million) in the financial year to March 2021.

The conversion price of S$0.08 is significantly higher than the previous S$0.051 at which mm2’s SGX-listed shares finished 2021 and prior to the disclosure. On Tuesday, mm2 shares leaped higher.

The planned disposal would have seen mm2 crystalize a substantial loss — it paid S$230 million for the eight-venue circuit in November 2017 – but the proceeds would have helped shore up the company’s balance sheet by reducing borrowings and allowing it to repay convertible bonds that were due in December. In a separate filing in December, mm2 said it had rescheduled repayment of the notes until December 2022. Earlier in 2021, auditors issued a going concern notice for the group.

“The cinema business has been a strategic part of the group’s content creation and distribution business, but it has been affected by Covid-19. With this proposed sale, it will stabilize the group’s financial situation and allow mm2 to continue to focus on the development and strengthening of core production content growing opportunities” said Ang at the time of the deal announcement.

Production subsidiary MM2 Entertainment last month announced the start of production on “Geylang,” a crime thriller set in Singapore’s red light district.