Korea's CJ CGV to divest 25% stake in Vietnam's real estate arm

The movie theaters giant will sell the 25% stake in CJ Vietnam for 32.4 billion won ($26.7 million), equivalent to 5.4% of its equity capital.

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

The group'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% 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% 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.

The giant 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.

The group 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.

Source: Business Korea, VIR