Contentree JoongAng (036420) is at risk of hitting its daily price limit for a third consecutive day since trading resumed. The decline stems from JoongAng Group entering rehabilitation proceedings under liquidity pressure and the collapse of a planned merger with Lotte Cinema.
According to the Korea Exchange on Monday, shares of Contentree JoongAng were trading at 1,778 won, down 672 won, or 27.43%, from the previous session. Contentree JoongAng hit its price limit on both June 1 and June 2, the only trading days this month so far.
The suspension of the merger process between Lotte Cinema and Megabox is seen as weighing on investor sentiment. Lotte Cultureworks and Contentree JoongAng had pursued the deal through negotiations between the two companies, but the launch of rehabilitation proceedings is understood to have contributed to the merger's suspension.
On May 19, JoongAng Group applied for a corporate restructuring program (workout) amid a liquidity crisis, and on May 30, Contentree JoongAng began rehabilitation proceedings along with four affiliates including Megabox JoongAng. Following the court's decision to commence rehabilitation proceedings, Contentree JoongAng is to submit a rehabilitation plan by December 15.
JoongAng Ilbo is pursuing a sale of its major shareholder's controlling stake as a self-rescue plan to improve its financial structure. With JoongAng Group as a whole caught in a liquidity crisis, the plan is to separate credit risk among affiliates to secure financial independence and actively attract new capital. The sale is expected to proceed swiftly.
