Wanda deals in jeopardy as Beijing's scrutiny mounts

BEIJING • China plans to punish billionaire Wang Jianlin's Dalian Wanda Group for breaching the nation's restrictions on overseas investments by cutting off funding and denying the conglomerate the necessary regulatory approvals, according to people familiar with the matter.

The government found the group violated China's restrictions in six investments, four of which have been completed, with two still pending, said the people, who asked not to be identified because the matter is private.

The deals being scrutinised include a Wanda unit's purchase of Nordic Cinema Group Holding and Carmike Cinemas, said the people, who stopped short of revealing the remaining transactions.

A Wanda representative declined to comment. China's banking regulator did not immediately respond to requests for comment.

The move represents an unprecedented setback for China's second-richest man, who was among the country's most prominent dealmakers up until last year.

Mr Wang had gobbled up Hollywood assets such as Kong: Skull Island producer Legendary Entertainment.

For the government, targeting one of the country's top businessmen represents an escalation of its broader efforts to crack down on capital outflows.

Wanda Properties International's 2024 notes declined as much as 4.8 cents on the dollar to 100.2 cents in afternoon trading in Hong Kong yesterday, according to Bloomberg-compiled data.

Wanda Hotel Development shares fell as much as 7.3 per cent.

According to the people, the four completed deals will be subjected to punitive measures, like no financing from domestic banks; barring of assets being injected into any listed entity in China; barring Wanda from injecting capital into those assets from within China or involving them in any restructuring with any of Wanda's domestic units; and no government approval will be given if Wanda attempts to sell those assets to any Chinese companies.

On the two pending deals, related authorities will not provide support with financing or foreign-exchange-related approvals needed to move money out of China, according to the people.

Wanda is among conglomerates, including Fosun International, HNA Group and Anbang Insurance Group, whose loans are under government scrutiny after China's banking regulator asked some lenders to provide information on overseas loans to the companies, people familiar with the matter said last month.

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 in a 63.2 billion yuan (S$12.8 billion) deal announced last week.

For Mr Wang, the sale of the bulk of his Wanda City projects - massive multi-billion-dollar complexes with theme parks and lodgings - represented a departure from the billionaire's past predictions that he would build a tourism empire bigger than that of Walt Disney.

BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on July 18, 2017, with the headline 'Wanda deals in jeopardy as Beijing's scrutiny mounts'. Print Edition | Subscribe