Cash-strapped PNC to sell 12.5 pct stake in CGV Vietnam

Phuong Nam Cultural Joint Stock Corporation (HoSE: PNC), which runs the famous namesake bookstore chain, is seeking shareholders’ approval to sell a 12.5 percent stake in Vietnam’s biggest movie chain CGV for VND160 billion ($7 million).

The cash-strapped firm has already found a buyer in real estate investment firm called Black Diamond. The firm was established last April with a chartered capital of VND120 billion ($5.3 million).

PNC expects to close the deal before July 5 and reduce its ownership in CGV to 7.5 percent.

The corporation’s decision has come as a surprise to many, because it had said at its general body meeting last March it had no intention to trim down its stake in CGV because the movie chain fetches it dozens of billions of dong ever year.

CGV Vietnam contributed profits of more than VND18 billion ($800,000) and VND21 billion ($922,000) respectively to PNC’s business results in 2016 and 2017.

The corporation said that the money generated from the sale will be used to pay debts, particularly its $7 million debt and $812,000 in interest payments to Singapore’s Cross Junction Investment Pte Ltd (CJI), which is due by the end of this month.

PNC is in deep financial trouble as a result of prolonged poor business performances, said chairman Dang Ba Tung.

It owes more than VND321 billion ($14 million) to suppliers as of May 18. Tung said the corporation faces the risk of being delisted if it cannot resolve its financial problems.

Tung said his board has sought many ways to settle its debts, but these have not worked. The board proposed to shareholders that PNC’s chartered capital is raised nearly three times to VND300 billion ($13 million) but this proposal was rejected. PNC cannot get a loan from banks or other individuals under its lending agreement with CJI.

The embattled company reported a record post-tax loss of VND66 billion ($2.9 million) last year.

PNC is one of the leading book retailers in Vietnam, owning many bookstores and book cafes nationwide.

It holds 20 percent of equity in CGV Vietnam, a subsidiary of South Korea's CJ Group, which has 47 percent of the local market share.