HONG KONG • Dalian Wanda group's billionaire founder Wang Jianlin has agreed to buy a majority stake in Wanda Hotel Development for US$470 million (S$633 million) from Wanda Commercial Properties, a move that is expected to boost liquidity at the indebted property firm.
In a statement to the stock exchange on Monday, Wanda Hotel said Wanda Commercial Properties Overseas, which is about 60 per cent owned by Mr Wang, will transfer its 65.04 per cent stake to Wanda Investment Holding - 100 per cent owned by Mr Wang - at HK$1.20 a share.
The deal is expected to shore up the finances of Wanda Commercial Properties, which wholly owns Wanda Commercial Properties Overseas. According to ratings firm S&P, Wanda Commercial Properties had total debt of 279 billion yuan (S$57 billion) as of end-June.
Beijing's crackdown this year on high-profile overseas ventures has drawn in groups such as Wanda, forcing conglomerates to reduce their deal-making ambitions.
Wanda announced plans earlier this year to sell most of its tourism projects and hotels in China to Sunac China and Guangzhou R&F Properties for about US$9 billion.
S&P analyst Dennis Lee said Monday's deal was different from the sale to Sunac and R&F because it was offshore money.
"We were concerned about the offshore situation of Wanda Commercial Properties, but with more liquidity (from this deal) it will help to repay its bank borrowings."
He added that S&P's latest downgrade in September had triggered a change of covenant and the company was in discussions with banks on a resolution.
Last week, Fitch Ratings affirmed the ratings of Wanda Commercial Properties at "BBB" after it was given permission by Chinese regulators to sell bonds worth US$1.5 billion overseas.
The ratings agency, however, left the group on "watch negative" - meaning it could be downgraded - citing its "continued lack of definitive funding channels".
Wanda Hotel shares closed up 10.5 per cent at HK$1.58 on Monday after the announcement.