Phuong Nam makes distress sale of stakes in CGV cinemas

The firm said the sale would be worth for VND101 billion ($4.5 million).

In June the Vietnamese private firm had sold a 12.5 percent stake to realty firm Kim Cuong Den JSC for VND160 billion ($7.1 million).

Thus, while the total of VND261 billion is almost nine times what the company had paid to acquire the 20 percent stake (VND30 billion in 2004), it values the chain at just half the price Korea’s CJ Group did when buying Megastar, formerly CGV, seven years ago.

Phuong Nam’s sale values the chain, which has a 47 percent market share of Vietnam’s cinema industry, at $56 million while the CJ transaction had valued it at $100 million.

With 53 cinemas, CGV reported revenues of VND2.6 trillion ($115 million) and after-tax profit of VND107 billion ($4.75 million) last year.

Insiders said the fire sale was due to the financial distress PNC has faced for several years, and the money would help it pay off its debts.

At the end of the second quarter this year PNC’s liabilities had amounted to VND548.7 billion ($23.54 million), or 93 per cent of its capital.

It has accumulated losses of more than VND98.3 billion ($4.22 million).

Established in 1982 in HCMC, PNC has interests in the film (Phuong Nam Film Studio), printing (Phuong Nam Printing Factory) and publishing (Phuong Nam Book) industries. It also has investment in stationery and gift retailing.

Shares of the company, listed on the Ho Chi Minh Stock Exchange (HOSE), are currently under special control for reporting losses for two consecutive years.

It will probably be forced to delist if losses exceed owner’s equity.

On August 30 PNC shares closed at VND13,800 ($0.6) per unit.