Under pressure to pay a $7-million debt and an $812,115 interest, Phuong Nam Culture JSC or PNC has to sell more than half of its shares held in CJ CGV Vietnam Co., Ltd.
PNC has consulted its shareholders in writing on the transfer of a 12.5 per cent stake in CJ CGV Vietnam which is operating the largest cinema chain in Vietnam.
PNC expects to gain around VND160 billion ($7.02 million) from the sale of these shares. Its partner Black Diamond Joint Stock Company, which was just established at the end of April 2018 with charter capital of VND120 billion ($5.26 million), will acquire these shares.
This amount will be prioritized to pay Cross Junction Investment Pte Ltd (CJI) a $7-million principal and an interest of VND18.5 billion ($812,115). CJI’s loan to PNC is mortgaged by PNC's stake held in CJ CGV Vietnam.
After the divestment, PNC will hold a 7.5 per cent stake in CJ CGV Vietnam. PNC’s move was unexpected because the company's leaders said in the shareholders’ annual meeting that the company is not planning to divest from CJ CGV Vietnam. It is “the goose that lays the golden egg", which yields several tens of billions of VND each year to PNC.
In the shareholders’ annual meeting, PNC did not approve to either raise its charter capital plan or borrow loans from the bank since the company has no collateral and is not allowed to mobilize capital from other organizations and individuals under the loan agreement entered with its partner CJI.
PNC has faced many difficulties in operating and managing financial resources due to disagreement from its leaders. After changing the entire management team at the end of 2017, PNC business operation has improved when revenue in the first quarter of 2018 reached VND156.6 billion ($6.87 million), an increase of 28 per cent year on year. However, the company still suffers a loss of VND1.8 billion ($79,051) in this quarter and raises its accumulated loss to nearly VND110 billion ($4.83 million).
Under the pressure of creditor, PNC submitted to its shareholders the capital withdrawal plan from CJ CGV Vietnam. This seems to be a big blow to the company as CGV accounts for 47 per cent of the cinema market share in Vietnam and has had revenue and profit growth over the years.
It is known that in 2017, CGV Vietnam obtained VND2.7 trillion ($118 million) in revenue and VND136.5 billion (nearly $6 million) in profit.
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