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China Blocks Banks From Financing Dalian Wanda’s Foreign Acquisitions (Report)

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China Blocks Banks From Financing Dalian Wanda’s Foreign Acquisitions (Report),

11:52 PM PDT 7/16/2017 by Patrick Brzeski

The order appears to retroactively apply to six of Wanda’s largest overseas deals, including the buyout of Legendary Entertainment and AMC Entertainment.
Chinese billionaire Wang Jianlin’s cash-flow woes are far from over. 
The Chinese government’s top banking regulators have ordered the country’s largest financial institutions to stop lending to the tycoon’s Dalian Wanda Group to finance its overseas entertainment acquisitions, according to a document seen by The Wall Street Journal. 
Beijing officials are understood to have convened a meeting with the executives of China’s largest financial institutions on June 20, where the bankers were informed that six of Wanda’s major overseas acquisitions — including the buyout of AMC Entertainment in 2012 and Thomas Tull’s Legendary Entertainment for $3.5 billion last year — were subject to the government’s restrictions on capital outflows unveiled last year.
Other Wanda deals included in the order were: U.S. exhibitor Carmike Cinemas, U.K. yacht maker Sunseeker International, Europe’s largest movie theater chain Odeon & UCI Cinemas Group, and Stockholm-based Nordic Cinema Group.
Four of those deals already closed months ago, and the two remaining transactions — the buyouts of Odeon and Nordic — are being executed by Wanda’s U.S.-based AMC unit, which trades on the New York Stock Exchange and would appear to be outside the reach of Chinese regulators. But a source tells the Journal that the new regulatory actions can be expected to prevent Wanda from generating new financing in China for the four past transactions, as well as the two that are pending. Whether Wanda will proceed with the pending deals for the two European cinema operators given the government’s apparent discouragement also becomes an open question. 

Chinese dealmakers announced a staggering $246 billion in outbound acquisitions last year, but Beijing’s regulators have since pumped the breaks. In an effort to stem capital flight, which was seen as contributing to a devaluation of China’s battered currency, the government upped scrutiny of large transactions and instituted various measures to make it more difficult for acquirers to shift capital overseas. 
Although famous for its close government connections, Wanda has increasingly found itself at the center of the regulatory squeeze. Last month, Beijing asked state banks to review their exposure to several of China’s most prolific overseas deal makers, including Wanda. News of the action triggered a panicked sell-off of Wanda Film Holdings shares, forcing the company to request a temporary suspension of trading.
According to the Journal’s sources, the new order will prevent Wanda from using any of its mainland Chinese funds to further capitalize its prior overseas deals. Wanda also remains banned from injecting these foreign entities into its publicly traded entertainment company in China, Wanda Film Holdings. Last year, Wanda attempted to merge Legendary with Wanda Film in precisely this fashion, but the deal was derailed by authorities.
The latest increase of regulatory pressure on Wanda’s financing perhaps helps to explain Wang’s surprise move last week to sell Wanda’s much-touted theme parks and hotel business to fellow real estate conglomerate Sunac China for $9.3 billion. Wang said the funds raised by the deal would be used to reduce Wanda’s heavy debt load.

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The order appears to retroactively apply to six of Wanda’s largest overseas deals, including the buyout of Legendary Entertainment and AMC Entertainment.

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Source: http://www.hollywoodreporter.com/news/china-blocks-banks-financing-dalian-wandas-foreign-acquisitions-1021641?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+thr%2Ffilm+%28The+Hollywood+Reporter+-+Movies%29

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