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| A CGV movie theater is closed due to the COVID-19 pandemic. / Korea times file |
By Kim Jae-heun
With the movie theater industry facing unprecedented difficult times caused by the COVID-19 pandemic, CJ Group has shelved its plan to sell off its multiplex CGV cinema chain.
According to the Korean Film Council, Tuesday, only 10,776 people visited movie theaters here Monday, the lowest number recorded in the history of the Korean cinema business, breaking the former record of 14,519 tallied just a week ago.
Theaters also had the smallest number of visitors on the Jan. 8 to Jan. 10 weekend since the film council started to collect data in 2004.
This is leaving CJ Group with a deep dilemma on how to improve its finances.
CJ Group Chairman Lee Jay-hyun's vision of "World Best CJ" includes getting rid of non-mainstream firms and focusing on its food, logistics and entertainment business; and it has consistently been reported that CGV would be put up for sale. The group sold its 28.57 percent stake in the merged entity created by combining three overseas CGV corporations in China, Vietnam and Indonesia, to the MBK Partners and Mirae Asset Daewoo consortium in 2019.
It was expected that it would only be a matter of time until CJ would dispose of the rest of its stock in the near future.
However, the COVID-19 outbreak halted this plan indefinitely. It has further aggravated CJ CGV's business performance as 30 percent of theaters directly managed by the headquarters were forced to shut down last October.
In the same month, CJ CGV strived to improve its finances by encouraging voluntary retirement and unpaid leave among its staff, but these moves were not very effective.
Last month CJ Group revealed that it would lend 200 billion won to the multiplex chain, to enable the latter to lower its debt ratio.
CJ CGV recorded a 96.8 billion won operating loss in last year's third quarter ― giving it an accumulated deficit of 298.9 billion won.
To make the situation worse, repayment of a total revenue swap (TRS) deal is due in May. In 2016, CJ CGV spent 800 billion won to acquire Turkey's largest cinema chain Mars Entertainment. In order to secure strategic investors for the takeover, CJ CGV took out a loan by the TRS method that guarantees a principal repayment by a fixed date.
CJ Group's multiplex cinema chain has to pay back 350 billion won to its investors in four months.
