Australian exhibition giant Village Roadshow announced the long-anticipated sale of its 50% stake in leading Korean cinema circuit CGV for $81m (A$150m). Korean partner CJ Entertainment, which has operational control of the company, will retain its 50% share.
The stake was bought by venture capital firm Asia Cinema Holdings, a Dutch company made up of funds advised by private equity firm CVC Asia Pacific Ltd. Additional funds were supplied by 3i Group Plc III.L and Intermediate Capital Group, both of the UK.
Speaking to Screen International in July, Lee Kang Bok, chief executive of CJ Entertainment, said that the business is well run and would not be affected by Village's long-planned withdrawal. "We are ready whenever they want to pull out."
Launched in 1998, CGV is the current market leader in Korea's exhibition sector with 92 screens on 11 sites. It has announced plans to expand to 172 screens by the end of 2004.
The withdrawal, which nets Village Roadshow a $49.5m (A$90m) profit on the stake's book value, comes amidst the company's efforts to narrow its focus to those territories in which it has management control. Over the past two years it has sold its interests in seven countries, while also buying out its 50% partner in Greece. It currently operates in 10 markets. Shares in Village Roadshow were down four cents to A$1.31 on the news, with the overall market having dropped 0.9 percent.
Lee said that Korea's fast-developing exhibition sector - $410m in gross revenues from 800 screens in 2001- remains highly profitable: "CGV has produced well enough for us that we can be comfortable merely breaking even in our film [production and distribution] business."