![CJ CGV Shares Fall as Investor Jitters Rise](https://www.forexbrokersreview.org/img/e9911c20-6993-4005-9faf-48b5ca3ddba4/news-article-14.jpeg?fm=jpg&q=80&fit=max&crop=1920%2C1080%2C0%2C0&w=810)
South Korean cinema-chain operator CJ CGV saw its shares plummet by a record 25% on Monday, raising concerns among investors about potential overhang risk following the company's new rights issue. The stock closed at 5,680 won, marking its biggest percentage decline since its listing in 2004. Meanwhile, the benchmark Kospi ended 0.5% lower.
The sharp sell-off occurred just two days before CJ CGV's new common shares are set to start trading on the Korea Exchange. Earlier this month, the company issued 74.7 million new shares, surpassing the existing 47.7 million shares, in a bid to raise KRW415 billion ($310.7 million). The capital raised is aimed at debt repayment, working-capital needs, and facility investments.
The new shares were priced at KRW5,560 each, which is 27% lower than the initial guidance price due to weak demand from existing CJ CGV shareholders during the offering period of September 6-7. Any forfeited new shares were then sold to non-shareholder investors on September 13, and the trading of these new shares will commence on Wednesday.
While some analysts anticipate CJ CGV's debt reduction and improved financial health through scheduled debt repayments using the raised capital, they also believe that the company may benefit from its planned long-term investments.
Post a comment