The move is will shore up CGV’s balance sheet which has been badly hit by coronavirus closure of its cinemas. CGV’s debt to equity ratio increased by almost threefold to 845% in the first quarter of 2020.
According to the document published on Korea’s National Financial Supervisory Service, the stake will be sold for around $26.8 million (KRW 32.42 billion). The property subsidiary is currently jointly owned by: CH Holdings; CJ group’s entertainment unit CJ ENM; CJ Logistics; and CJ CGV, with each holding 25% stakes. Details of the transaction have not been fully disclosed, but it has been reported that the stake may be purchased by other parts of the CJ empire, most likely CJ Logistics.
“CJ Vietnam owns and constructs office buildings and other properties in Vietnam. Selling our stake in the unit does not mean withdrawal of our cinema business in Vietnam,” said CGV’s spokesperson.
CJ CGV entered Vietnam in 2011 when it acquired local cinema chain Megastar. The company is now the largest film exhibitor in Vietnam, having also developed its own theaters. It currently operates 488 screens in the country, and in 2019 sold over 20 million tickets.
The CGV group is the biggest cinema operator in South Korea and has challenged to be one of the largest exhibition conglomerates in the world. In addition to the Korean and Vietnamese businesses, it has significant businesses in Indonesia, China and Turkey, as well as outposts in the U.S. and Hong Kong.
The China cinemas have been particularly hard hit by the coronavirus outbreak. All cinemas in the country have been closed since January 23, and back in April it was reported by the Economic Weekly publication that CGV had been forced to lay off 30% of its Chinese workforce.