Dalian Wanda amends Sunac deal

Dalian Wanda Group chairman Wang Jianlin (centre) and Sunac chairman Sun Hongbin arriving for a strategic cooperation signing ceremony in Beijing yesterday. Wanda will now sell a 91 per cent total stake in 13 tourism projects to Sunac China for 43.8
Dalian Wanda Group chairman Wang Jianlin (centre) and Sunac chairman Sun Hongbin arriving for a strategic cooperation signing ceremony in Beijing yesterday. Wanda will now sell a 91 per cent total stake in 13 tourism projects to Sunac China for 43.8 billion yuan. PHOTO: REUTERS

BEIJING • Chinese commercial property conglomerate Dalian Wanda Group altered a deal with Sunac China announced a week ago, after banks scrutinised their credit risk, by bringing in another developer, Guangzhou R&F Properties.

In a joint announcement, Wanda said it would sell 77 hotels in China to Guangzhou R&F Properties for 19.9 billion yuan (S$4 billion), and a total of 91 per cent equity in 13 tourism projects to Sunac China for 43.8 billion yuan.

Chinese banks have been told to stop providing funding for several of Wanda's overseas acquisitions as Beijing tries to curb the conglomerate's offshore buying spree, sources familiar with the matter said on Monday.

Sunac chairman Sun Hongbin also confirmed to local media that banks had started reviewing the company after its deal with Wanda, and the company was in communication with the lenders.

The total price of the updated deal is around the same at 63.7 billion yuan, still the second-largest deal ever in China's real estate industry.

Under the original deal, Wanda would have sold to Sunac 76 hotels for 33.6 billion yuan and the stake in the tourism projects for 29.58 billion yuan.

"All three parties are winners," Wanda chairman Wang Jianlin told a press conference. " Wanda is definitely a winner; through this transfer, (we will) lower debt significantly and collect a large amount of cash."

Mr Wang said that after the deal, Wanda property unit Wanda Commercial's debt would drop to 200 billion yuan from 400 billion yuan last year, and its cash would increase to 170 billion yuan from 100 billion yuan.

Sunac's Mr Sun said the firm had "ample" cash flow with 90 billion yuan of cash on hand.

Wanda Commercial has 100 billion yuan of cash on hand, and will get 68 billion yuan from the Sunac and R&F deals, Wanda's Mr Wang added.

R&F is one of the largest property developers in China's Guangdong province.

It has partnered Wanda in developing shopping complexes since the end of last year.

REUTERS

A version of this article appeared in the print edition of The Straits Times on July 20, 2017, with the headline 'Dalian Wanda amends Sunac deal'. Print Edition | Subscribe