China cracks down on Dalian Wanda's overseas deals

Postado Julho 17, 2017

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 those deals already closed months ago, and the two remaining transactions - the buyouts of Odeon and Nordic - are being executed by Wanda's USA -based AMC unit, which trades on the New York Stock Exchange and would appear to be outside the reach of Chinese regulators. 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 hard for acquirers to shift capital overseas.

Wanda, which owns a stake in soccer club Atletico Madrid, has over the past few years bought film producer Legendary, theater chains AMC Entertainment Holdings, Odeon & UCI Cinemas and Nordic Cinema Group, as well as a United Kingdom luxury yacht maker. Four of the six deals already closed between 2012 and 2016, including the purchases of AMC, rival theater chain Carmike Cinemas, Legendary, and British yacht maker Sunseeker International.

The company is attempting to build a global entertainment company, but Chinese bank regulators advised major banks in June that six of Wanda's recent foreign acquisitions conflicted with government restrictions, the Wall Street Journal reported.

The new measure apparently prevents Wanda from getting additional financing from Chinese banks for the four projects it has already bought, which could jeopardizing the group's ability to finance the two deals that have not yet closed.

Banks have been told not to finance the deals or to allow Wanda to use its offshore assets as collateral for financing.

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.