CJ CGV divest from subsidiary in Vietnam

CJ CGV divest from subsidiary in Vietnam

CJ CGV will dispose of 25 per cent stake in CJ Vietnam for 32.4 billion won ($26.7 million). It is equivalent to 5.4 per cent of its equity capital.

The sale is expected to complete on July 3. CJ Vietnam Co. is building CJ Group's Vietnamese office buildings, and CJ E&M, CJ, and CJ Korea Express each own 25 per cent of the company.

CJ CGV's financial structure has significantly weakened in the aftermath of the COVID-19 crisis. Its debt-to-equity ratio soared by nearly 200 percentage points in three months to 845 percent in the first quarter, with its total capital falling 22 per cent during the same period. Compared to a year ago, sales were halved and net loss increased from 85.7 billion won ($70.6 million) to 118.6 billion won ($97.76 million). Losses in overseas businesses such as Vietnam and Turkey are also expanding.

Previously in December last year, CJ CGV issued the plan to raise $286 million from the sale of a slice of its Indonesian, Vietnamese and Chinese businesses.

The company, which has its own stock market listing and is affiliated to the CJ Group, which includes CJ E&M and CJ Entertainment, said that it had sold a 29 per cent stake in CGI Holdings to financial investors MBK Partners and Mirae Asset Daewoo. The sale price implies a valuation of $986 million. That compares with a recently stated enterprise value of $1.3 billion.

CJ CGV said that the share sale would help reduce its own heavy indebtedness, to 436 per cent of its assets. However, there had no more information about the sales disclosed.

CJ CGV entered the Vietnam exhibition market in 2011 when it acquired local cinema chain Megastar Media Company with 54 screens in seven locations.

CJ CGV, the largest cinema operator by screens in South Korea, plans to invest $200 million to expand its presence in Vietnam over the next four years. CJ CGV plans to boost its cinema numbers by opening 12 to 15 new locations per year until 2020, and will expand its network of locations to remote areas across the country.