Wanda Group Inks $9.29B Sale Of Tourism Projects, Hotels

Randall Padilla
July 12, 2017

Its billionaire owner Wang Jianlin had previous year said his "wolf pack" of parks would beat U.S. rival Walt Disney Co.

China's second-richest man is in advanced talks to sell $9.3 billion worth of Wanda Group's hotels, land and tourism projects to Sunac China Holdings in what would be China's biggest property deal.

The surprise sale gives Wanda possible revenue to pay down debt that has soared during an aggressive expansion into entertainment, tourism and other consumer businesses. At the same time, the company's $5 billion privatization of its formerly Hong Kong-listed real estate unit may have stalled, potentially leaving Wanda founder Wang Jianlin in need of cash to pay back the buyout's backers.

Making reference to earlier acquisitions this year, namely a 17.6 billion yuan deal to invest in property transaction services provider Homelink and an ailing internet company Leshi, S&P described these acquisitions to be "opportunistic in nature, and the strategy and synergy with Sunac's main property development business remains unclear".

Wanda Hotel Development's stock price spiked 2.5-fold at one point on Monday, but it reversed direction on Tuesday, tumbling 12.94% to HK$0.74.

Wanda, headed by one of China's richest men, Wang Jianlin, had been one of the most acquisitive companies overseas, spending billions on a range of U.S. entertainment properties.

The deal will see Dalian Wanda Commercial Properties Co. Another downgrade would push the rating into "junk" category. "Wanda Commercial plans to repay most of the bank loans this year", Mr Wang told Caixin. The two parties are expected to sign an agreement on the deal by the end of this month.

Sunac's shares in Hong Kong were suspended from trading ahead of what it said would be a "very substantial acquisition" announcement.

Sunac, though, would surpass Evergrande as the most indebted developer in China after the deal, analysts said. It has also been very active globally, buying United States cinema chain operator AMC Entertainment Holdings Inc and taking a controlling stake in USA film studio Legendary Entertainment a year ago.

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