HONG KONG (REUTERS) - Dalian Wanda group's billionaire founder Wang Jianlin has agreed to buy a majority stake in Wanda Hotel Development Co for HK$3.67 billion 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 (Dec 4), Wanda Hotel said Wanda Commercial Properties Overseas, which is about 60 per cent owned by Wang, will transfer its 65.04 per cent stake to Wanda Investment Holding Co Ltd - 100 per cent owned by Wang - at HK$1.20 a share.
The deal is worth HK$3.67 billion (S$631.88 million) and is expected to shore up the finances of Wanda Commercial Properties Co Ltd, which wholly owns Wanda Commercial Properties Overseas. According to ratings firm S&P, Wanda Commercial Properties Co Ltd had total debt of 279 billion yuan (S$56.76 billion) as of end-June.
Beijing's crackdown this year on high-profile overseas ventures has drawn in several groups such as Wanda, forcing the conglomerates to reduce their dealmaking 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 & R&F because it was offshore money.
"We were concerned about the offshore situation of Wanda 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 this year 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 Property Co Ltd at 'BBB' after it was given permission by Chinese regulators to sell bonds worth $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. Wanda shares have jumped nearly 50 per cent since last Monday's close.
Last month, Wanda Hotel said it was open to "business opportunities" related to its portfolio of landmark overseas properties, although no sale talks were under way.
In August, Wanda Hotel announced plans to buy assets worth over US$1 billion, including a theme park operator and a hotel operator owned by sister companies, while also selling to its parent its interest in four foreign landmark property developments. But in September, the property sales and the theme parks purchase were excluded from the deal.
Wanda Hotel shareholders are scheduled on Friday to vote on the purchase of the hotel operating business for HK$878 million.