This article was displayed on the ChosunBiz MoneyMove (MM) site at 4:46 p.m. on Dec. 2, 2025.
CJ CGV is busy raising funds, but it does not appear to be going well. After being shunned in the corporate bond market, the company was said to have contacted private equity fund (PEF) managers. It is turning to PEFs again after suffering difficulties from borrowing from a PEF. But PEFs were also said to have no intention to invest, signaling rough going ahead.
According to the investment banking (IB) industry on the 2nd, CJ CGV is pursuing fundraising on all fronts. If it does not exercise the call option on 220 billion won worth of CBs by June next year, the interest burden will snowball, so the move is presumed to be to secure funds to address this.
The coupon interest rate on this CB is 1%, but the rate rises after the call option expires. A 3% interest rate applies for one year from June next year, with an additional 0.5 percentage point added each year thereafter. If CJ CGV fails to redeem the CB by maturity, the interest rate will rise to 15.5%. There is also a 400 billion won CB with similar terms, with only the call option exercise deadline and maturity set one year later.
CJ CGV initially sought to raise funds through corporate bonds. This year, it attempted to issue hybrid securities and corporate bonds worth 40 billion won and 100 billion won, respectively. But the market reaction was cold. The hybrid securities raised 30 billion won, and the corporate bonds were entirely unsold.
In the end, CJ CGV had to rely on policy-driven funding support. In September, CJ CGV issued 80 billion won in corporate bonds using the primary collateralized bond obligation (P-CBO) method. The maturity is three years, and the coupon rate is 5.81%. A P-CBO is a bond issued in a structure where the Korea Credit Guarantee Fund (KODIT) provides a guarantee to upgrade the rating of a company with a low credit rating. It is a method mainly used by small and midsize companies that find it difficult to enter the corporate bond market alone. Large corporations use it on a limited basis when the corporate bond market tightens.
However, the P-CBO alone is not enough, and additional fundraising is needed. This is why CJ CGV is turning to PEFs again.
Contrary to CJ CGV's expectations, analysis suggests it will be difficult for PEF managers to invest in CJ CGV. The company's operating profit in the third quarter of this year was 23.3 billion won, down 27.2% from a year earlier. Net debt stood at 867.1 billion won, and the debt ratio reached 701%. An IB industry source said, "Knowing CJ CGV's situation, we declined to invest without even looking at the terms."
As CJ CGV's financial plans go awry, the worries of CGI Holdings' financial investors (FIs) are deepening. CGI Holdings is a corporation established for CJ CGV to operate movie theaters locally in China, Vietnam and Indonesia. A pre-IPO investment was made in 2019, but after COVID-19, results plunged and the IPO plan collapsed.
FI PEF managers MBK Partners and Mirae Asset Securities PE selected Morgan Stanley as the lead manager to sell CGI Holdings, but the sale has made no progress due to the lack of suitable buyers. In July, the two firms exercised drag-along rights on CJ CGV regarding CGI Holdings.
MBK Partners and Mirae Asset Securities PE exercised the drag-along because CJ CGV abandoned exercising the call option on the two firms' equity stakes. At the time of the investment, CJ CGV agreed with the two firms to exercise a call option applying a certain rate of return if an IPO did not materialize within a set period, but it did not fulfill that agreement.
A CJ CGV official said, "We have not had meetings with PEF managers and plan to operate stably through preemptive fundraising."