CJ 4DPLEX, a subsidiary of CJ CGV, has issued a six-month private bond. The move is intended to refinance commercial paper (CP) issued last year, and the company is seen as having again chosen short-term debt amid heightened interest rate uncertainty recently. Many in the market view it as a strategy to buy time through short-term funding while financial pressure continues, and then pursue a lower-rate refinancing based on improved creditworthiness in the second half.
According to the investment banking (IB) industry on Wednesday, CJ 4DPLEX issued a 64 billion won corporate bond with a six-month maturity on the 10th of this month. The coupon rate is 5.5 percent per year, with Kyobo Securities serving as the lead underwriter. The issuance is refinancing funding to repay maturing debt.
CJ 4DPLEX issued 50 billion won in six-month CP and 20 billion won in private bonds last December. While the two funding instruments share the same maturity, the company is known to have split the issuance between CP and private bonds because of differing investor bases. The funds raised at the time were reportedly used for purposes including the redemption of hybrid securities. This latest corporate bond issuance is also largely aimed at addressing the maturity of those short-term borrowings.
CJ 4DPLEX is a subsidiary in which CJ CGV holds a 90 percent stake. It operates premium cinema businesses such as 4DX and ScreenX. However, its performance last year was sluggish. 4DPLEX's operating profit last year was 11.3 billion won, down 44 percent from 20.3 billion won a year earlier. Over the same period, its debt-to-equity ratio rose from 236 percent to 270 percent, increasing financial pressure.
Group-level support to improve the financial structure has also continued. CJ 4DPLEX issued 50 billion won in hybrid securities late last year, which CJ CGV acquired in full. Because hybrid securities are recognized as equity for accounting purposes, the measure is seen as aimed at managing the debt ratio and improving financial stability.
The market expects 4DPLEX to monitor whether its credit rating improves in the second half after issuing this short-maturity, high-rate bond. If its creditworthiness rises, it could refinance at a lower rate when the debt matures. "This issuance is largely for refinancing maturing debt," an IB industry official said. "It appears to be an intention to raise funds on a short-term basis and then refinance again on better terms if the credit rating improves down the line."
