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Photo courtesy of Yonhap News |
[Alpha Biz= Paul Lee] CJ CGV is facing growing concerns over its ability to secure funding as ₩700 billion in convertible bond (CB) call options near maturity, amid continued weak performance in the film industry and a lukewarm response from credit markets.
According to investment banking sources on August 3, CJ CGV’s ₩300 billion 32nd unsecured subordinated CB, issued in 2021, will reach its call option maturity in June 2026. Most of the funds raised were used for debt repayment.
Adding to the pressure, the company’s ₩400 billion 35th CB, issued in 2022, is also approaching its call option maturity, leaving CJ CGV with ₩700 billion in funding needs within the next two years.
While the 32nd CB carries a low coupon rate of 1%, the bonds have a step-up interest structure if the call option is not exercised:
From June 2026, the rate rises to 3% for one year.
Each subsequent year, the rate increases by 0.5 percentage points.
If CJ CGV fails to redeem the CB until final maturity, the interest rate could soar to 15.5%.
The same step-up structure applies to the 35th CB, raising the stakes for timely repayment or refinancing.
Market observers note that CJ CGV’s recent attempts to raise capital through hybrid securities and corporate bond issuances were met with weak demand, reflecting investor skepticism about the cinema chain’s recovery trajectory.
Compounding the challenge, CJ CGV’s share price slumped following a rights offering, making it unlikely that bondholders will convert their CBs into equity — a factor that would have eased repayment pressure.
Analysts warn that unless CJ CGV can restore investor confidence and secure stable funding channels, the company could face significant financial strain as the CB call option deadlines approach.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
