As Lotte Cinema, the No. 2 player by market share in Korea's movie theater market, and No. 3 Megabox push ahead with a merger, domestic private equity fund manager IMM Credit & Solution (ICS) is reviewing an investment of up to 400 billion won.
According to the investment banking industry on the 22nd, ICS is reviewing a plan to invest 300 billion to 400 billion won in the merged entity of Lotte Cultureworks, the operator of Lotte Cinema, and Megabox Joongang, the operator of Megabox. The advisor is UBS.
However, the talks remain in the early stages. An investment banking industry official said, "Even if the investment goes through, the earliest the funds would be paid in is late this year or early next year."
Lotte Group and JoongAng Group are also said to be highly likely to make additional capital contributions. The industry believes the two companies each need to invest at least 100 billion won to normalize the company.
The pre-investment valuation of the merged company is said to be about 400 billion won. If ICS invests 400 billion won as mezzanine and later converts it into equity, it is estimated to become the largest shareholder with about a 40% stake.
Previously, Lotte and JoongAng Group signed a memorandum of understanding (MOU) in May last year to integrate their theater businesses. However, progress is said to have stalled due to liquidity deterioration at parent companies Lotte Shopping and Contentree JoongAng.