CJ to Pursue Capital Increase of 1 Trillion Won for CGV Normalization

570 Billion Won Paid-in Capital Increase and 450 Billion Won In-Kind Contribution
Major Shareholder CJ Bears Nearly Half
Expansion of Technology Center and Foundation for Future Space Business Operators

CJ CGV is set to stabilize its financial structure and strengthen future businesses through a capital increase totaling 1 trillion won. This move aims to improve the financial situation worsened during the COVID-19 period while innovating the movie screening-centered business structure to lay the foundation for evolving into an experiential lifestyle space operator.

On the 20th, CJ CGV held a board meeting and resolved a paid-in capital increase worth 570 billion won. This capital increase will be conducted through a rights offering followed by a general public subscription for any unsubscribed shares, with subscriptions scheduled for early September. Shinhan Financial Investment, Korea Investment & Securities, and Samsung Securities will jointly lead the paid-in capital increase as co-lead underwriters.

CJ Corporation plans to participate in the rights offering with approximately 60 billion won and, separately, intends to contribute shares of its subsidiary CJ OliveNetworks as a non-cash contribution through a third-party allotment. The value of the non-cash contribution will be confirmed through court approval, with the current valuation by an accounting firm estimated at about 450 billion won. Combined with the capital increase scale, this will result in a capital expansion totaling 1 trillion won at once.

On the same day, CJ Corporation expressed its intention to participate in the CGV capital increase through a fair disclosure following the decision on CJ CGV’s paid-in capital increase.

A CJ CGV official stated, “While the recovery of moviegoers continues, demand for alternative content such as special theaters like 4DX and ScreenX, live concerts, and sports events is increasing even more,” adding, “We will continue to provide new experiences in theaters and pursue the NEXT CGV strategy by discovering future new businesses.”

In fact, the sales proportion of CJ CGV’s unique special theaters such as 4DX, ScreenX, and premium theaters has nearly doubled from 16% in 2019 to 31% currently. In particular, ScreenX holds a dominant position by securing a large number of tentpole movies based on its unique technology and Hollywood local recognition. Alternative content such as BTS movies, Lim Young-woong concerts, and live sports broadcasts have also continued to sell out, surpassing last year’s total attendance (420,000) already in May.

CGV also has high expectations for business synergy with CJ OliveNetworks in new business areas. Based on CJ OliveNetworks’ IT and AI technology experience and business know-how, it is expected to enable ▲smart cinema construction (advancement and digitalization) for operational efficiency ▲acceleration of VFX (visual effects) business expansion ▲theater operation and advertising system solution businesses.

A CJ official said, “This capital increase participation is not simply a financial injection due to deterioration,” adding, “Just as CGV started under difficult conditions during the 1998 financial crisis and led the golden age of Korean cinema, it aims to become a future space business operator presenting the future of theaters.”

This content was produced with the assistance of AI translation services.