South Korea's CJ CGV to divest from Vietnamese subsidiary

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CJ CGV will dispose of its stake in a Vietnamese real estate investment subsidiary (Photo: Vietnamnet)

CJ CGV will dispose of its stake in a Vietnamese real estate investment subsidiary to improve its financial structure, which has weakened in the wake of the new coronavirus crisis, according to Business Korea.

CJ CGV announced on June 8 that it will dispose of its 25 percent stake in CJ Vietnam Co., a local real estate investment company, for 32.4 billion won (US$ 27 million). It is equivalent to 5.4 percent of its equity capital.

The scheduled date for its sell-off is 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 percent of the company.

CJ CGV's financial structure has significantly weakened in the aftermath of the COVID-19 crisis (Photo: Business Korea)

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 percent during the same period. Compared to a year ago, sales were halved and net loss increased from 85.7 billion won (US$ 71 million) to 118.6 billion won (US$ 99 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.

CJ CGV plans to invest $200 million to expand its presence in Vietnam over the next four years (Photo: CGV)

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.

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