China cracks whip on Wanda Group's overseas acquisitions

James Marshall
July 18, 2017

The government has determined that six of Wanda's foreign investments, four of which have already closed, have violated capital controls that were enacted a year ago, according to reports.

The government measures include a ban on banks from providing Wanda with financial support, Bloomberg News said, citing sources familiar with the government action.

Four of these deals have already closed but the two that haven't - Odeon and Nordic Cinema Group - are being acquired via Wanda's AMC unit in the USA, which trades on the New York Stock Exchange and therefore doesn't appear to fall under China's regulatory jurisdiction.

The company, owned by billionaire Wang Jinanlin, began as a real estate company but has moved into global acquisitions that include U.S. The rules enacted by China's cabinet, the State Council, discouraged mainland firms from investing in overseas real estate and entertainment projects.

Other Wanda deals included in the order were USA exhibitor Carmike Cinemas, European cinema chain Odeon & UCI Cinemas Group, Nordic Cinema Group and United Kingdom yacht maker Sunseeker International.

The two remaining deals, for European theater operators Odeon & UCI Cinemas Group and Nordic Cinema Group, have not yet closed. "Not only Wanda, every Chinese company won't find it easy anymore to acquire assets overseas".

Chinese regulators have ordered local banks to stop loans to property-to-entertainment giant Dalian Wanda Group, according to the Wall Street Journal. Besides the bank-financing ban, Wanda will be prohibited from selling those acquired assets to any listed entity in China, infusing capital into those assets from within China or involving them in any restructuring with any of Wanda's domestic units, the people said. The instructions were handed down by the China Banking Regulatory Commission in early June.

Though cutting off funding may pressure Wanda, the group is poised to get some relief after it agreed to sell hotels, land and projects to Chinese developer Sunac China Holdings Ltd (融創中國控股) in a 63.2 billion yuan (US$9.3 billion) deal announced last week.

In its most recent annual report at the end of 2015, Dalian Wanda Commercial Properties reported total debt of RMB 222 billion.

Other reports by Click Lancashire

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