Aju Business Daily

SEOUL -- CJ CGV, a cinema franchise of South Korea's food and entertainment conglomerate CJ, secured $286 million through the sale of shares in subsidiaries in China, Vietnam and Indonesia to a domestic consortium. Proceeds will be used as an investment fund to improve its financial structure.

CGV said in a regulatory filing on Monday that it has agreed to sell a 28.57 percent stake in its subsidiaries in China, Vietnam and Indonesia to the consortium of MBK Partners, a private equity fund, and Mirae Asset Daewoo, a major investment banking and stock brokerage company.

CGV said it carried out the deal by integrating its business in China, Vietnam and Indonesia through a change in its governance structure and issuing new shares of CGI Holdings, a merged entity, to outside investors. CJ CGV will hold a 71.43 percent stake in CGI Holdings, and the remainder to be controlled by the consortium if it completes procedures by the end of this year.

CGV's sales in the third quarter of this year rose 5.2 percent from a year ago to 497.5 billion won, but its operating profit fell 5.1 percent to 31 billion won. After its stake sale, CGV can lower its debt ratio from 722.9 percent in the third quarter to 435.9 percent. CGV has attributed its high debt ratio to a change in accounting standards that recognize lease as accounting assets and liability.

CGV has aggressively expanded its overseas business, opening a subsidiary in China in 2006, Vietnam in 2011 and Indonesia in 2014.