Tue, Jul 18, 2017 - Page 10 News List

China may punish Wanda over overseas investments

Bloomberg

China plans to punish billionaire Wang Jianlin’s (王健林) Dalian Wanda Group Co (萬達集團) for breaching the nation’s restrictions on overseas investments by cutting off funding and denying the conglomerate necessary regulatory approvals, to people familiar with the matter said.

The government has found violations of Chinese restrictions in six investments, four of which have been completed and two are still pending, said the people, who asked not to be identified because the matter is private.

The deals being scrutinized include a Wanda unit’s purchase of Nordic Cinema Group Holding AB and Carmike Cinemas Inc, the people said, without identifying 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 nation’s most prominent dealmakers up until last year by gobbling up Hollywood assets, such as Kong: Skull Island producer Legendary Entertainment. For the government, targeting one of the nation’s top businessmen represents an escalation of its broader efforts to crack down on capital outflows.

According to the people, the four completed deals will be subject to punitive measures, including:

‧ No financing from domestic banks

‧ Assets will be barred from being injected into any listed entity in China

‧ Wanda will be barred from injecting capital into those assets from within China or involve them in any restructuring with any of Wanda’s domestic units

‧ 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 Ltd (復星國際), HNA Group Co (海航集團) and Anbang Insurance Group Co (安邦保險集團) whose loans are under government scrutiny after the nation’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 Ltd (融創中國控股) in a 63.2 billion yuan (US$9.3 billion) deal announced last week.

For Wang, the sale of the bulk of his “Wanda City” projects — massive multibillion-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 Co.

The Wall Street Journal earlier reported that China is restricting the completion of six overseas deals by Wanda Group following the government’s broader crackdown on offshore investments, citing documents.

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