This article was published on June 17, 2025, at 3:09 p.m. on the ChosunBiz MoneyMove site.
Mirae Asset Securities and MBK Partners are expected to soon notify the forced sale under the drag-along rights of CGI Holdings, the holding company that manages CJ CGV's theaters in Asia, while the CJ Group has shown no significant movement. This has led some to analyze that CJ Group may not be interested in the theater business.
According to the investment banking (IB) industry on the 17th, Mirae Asset Securities' private equity division, the second-largest shareholder holding 17.58% equity in CGI Holdings, and MBK Partners are expected to notify CJ of their decision to exercise forced sale rights according to the shareholder agreement on the 19th.
Procedurally, the forced sale has not been finally confirmed. On the 19th, when the investing parties inform CJ of whether to exercise their rights, CJ will propose to the investing parties the exercise of the call option and pricing within a month. If the investing parties do not accept the proposed price, the forced sale will be final.
The industry believes that CJ CGV will look for new investors who will buy both their equity and that of the investors rather than repurchasing the shares held by the investors. Mirae Asset Securities and MBK Partners had appointed Morgan Stanley as the sales manager, but there are also suggestions that CJ may seek a separate sales manager.
An industry insider commented, "From CJ's perspective, additional financial investment would be a burden," adding that even if they find a new acquirer for CGI Holdings' equity or exercise the call option, they will likely only propose a price that reimburses existing investors' acquisition financing.
If a sale, rather than the exercise of the call option, is confirmed, there are speculations that CJ Group may be withdrawing from the theater business, given that CGI Holdings accounts for half of CJ CGV's movie business profits.
Another industry source stated, "From CJ Group's standpoint, the movie business may not be a high priority," explaining that the lack of significant movement even in the context of the merger between Megabox and Lotte Cinema could be due to this.
However, CJ has denied market speculation about abandoning the movie business. A CJ official noted, "We have made various efforts, including capital increases, to revive CJ CGV, so these speculations are not true."
Mirae Asset Securities' private equity division and MBK Partners acquired a 28.57% equity stake in CGI Holdings from CJ CGV for 333.6 billion won in 2019. CJ CGV planned to take CGI Holdings public on the Hong Kong Stock Exchange with a corporate value of over 2 trillion won by June 2023. If unsuccessful, they planned to provide options for investors to either repurchase equity at a guaranteed rate of return (call option) or allow investors to sell their largest shareholder equity to a third party.
Ultimately, as theaters closed worldwide, including those in Korea, China, and Vietnam due to the COVID-19 pandemic, CGI Holdings’ performance worsened, and plans to recoup investments through an IPO in Hong Kong have fallen through. To stock list on the Hong Kong Stock Exchange, they must achieve a minimum cumulative profit of at least 80 million Hong Kong dollars (approximately 14.7 billion won) over the past three years. However, CGI Holdings reported cumulative losses of 53.4 billion won during that period.
As a result, CJ CGV repurchased 8.7% of the equity held by investors for 126.3 billion won last July, postponing the timing for the exercise of drag-along rights to this year. Nevertheless, theater operators have failed to recover their performance amid the pressure of online video services (OTT) represented by Netflix.
Sales, which amounted to 1.94 trillion won in 2019, dropped by about 61% last year to 758.7 billion won. They earned 121 billion won in 2019, but recorded an operating loss of 7.6 billion won last year. As of the first quarter of this year, borrowing funds totaled 1.0579 trillion won, increasing by over 22% compared to the time of investment. This has created difficulties in financing, including through perpetual bonds.
CJ CGV received a shareholder-designated capital increase of 570 billion won and a contribution of 444.4 billion won (all shares of CJ Olive Networks) in June 2023, but is again experiencing a financial crisis after two years.