Tip News

February 19, 2018

China cuts off Wanda funding after overseas buying spree: reports

China cuts off Wanda funding after overseas buying spree: reports
'Headed by tycoon Wang Jianlin, one of China's richest men, Wanda has been on hueg overseas spending spree, including the $3.5 billion purchase of Hollywood movie maker Legendary Entertainment ' - By: AFP FRED DUFOUR

Shanghai (AFP) - China plans to squeeze high-flying billionaire Wang Jianlin's conglomerate Wanda by cutting off new loans and regulatory approvals for deals, reports said Monday, punishing it for breaching Chinese restrictions on overseas investments.

The regulatory retaliation marks a major setback for a formerly fast-expanding company that was among the most aggressive players in a flood of acquisitions around the world by Chinese companies but is now scrambling to slash debt.

Chinese regulators last year began rolling out tough restrictions to stanch the flow of money overseas, warning of "irrational" investments.

Six of Wanda's high-profile acquisitions in recent years are now being scrutinised by regulators, Bloomberg News and the Wall Street Journal reported.

They include Wanda's purchase last year of US movie maker Legendary Entertainment -- makers of the latest "Batman" trilogy and "Jurassic World" -- for $3.5 billion, as well as a Wanda unit's purchases of Nordic and US cinema chains, the reports said.

Chinese banking regulators met several of the country's biggest state-owned lenders on June 20 to notify them of the government scrutiny, the Wall Street Journal said, citing a document from one of the participating banks.

The reports came just a week after Wanda announced it was selling off 76 hotels and nearly of all its holdings in 13 other tourism-related projects to developer Sunac China Holdings for $9.3 billion in what Bloomberg News said was China's largest-ever property deal.

Monday's reports appeared to suggest Wanda may have been motivated to make the deal -- which surprised markets -- out of desperation as it contemplated the impact of the threatened cut-off of funding and regulatory approvals.

Shares in Wanda Hotel Development plunged 7.25 percent in Hong Kong on Monday.

Companies like Wanda -- which diversified rapidly from commercial property into entertainment, theme parks, sports and other sectors -- are now reportedly facing difficulty paying off debts run up in their buying sprees.

Headed by Wang, one of China's richest men, Wanda admitted last month that China's banking regulator was looking into potentially risky loans the company held.

Wanda said at the time that other companies that invested aggressively overseas also were being scrutinised, including Rossoneri Sport Investment Lux, a consortium that recently purchased Italian football club AC Milan, Club Med's owner Fosun Group, and HNA Group.

Neither China's banking regulator nor Wanda made any immediate public statement on the reports.

In recent years, Beijing encouraged companies to invest overseas to find new markets, access technology and increase China Inc's influence.

But they reversed course as concerns grew over capital flight, a weakened Chinese currency, and potentially unsound acquisitions.

Authorities also are moving aggressively to corral alarming levels of debt and risky lending amid warnings of a potential financial contagion in the world's second-largest economy.

Short link: https://tipnews.com/u/MTQwOTU=

See also:

Related articles

Arsenal announce record shirt deal with Emirates

Arsenal announce record shirt deal with Emirates

Arsenal announced the club's biggest-ever sponsorship deal worth a reported £200 million on Monday, extending their shirt partnership with Dubai-based airline Emirates by five years.The Gunners confirmed the branding of Emirates, which began its sponsorship

Eurozone backs Spain's De Guindos for ECB top job

Eurozone backs Spain's De Guindos for ECB top job

Eurozone finance ministers backed their Spanish peer Luis De Guindos for the vice-presidency of the European Central Bank on Monday after his only rival pulled out.The choice by the single currency bloc's finance ministers was widely expected and came despite

Gates says billionaires should pay 'significantly' more taxes

Gates says billionaires should pay 'significantly' more taxes

Bill Gates says he has paid more than $10 billion in taxes over a lifetime but billionaires like him should pay "significantly" more because they benefit more from the system.The Microsoft co-founder, the world's second richest man after Amazon's Jeff Bezo

HELLO, PLEASE TAKE A MOMENT TO RATE THIS POST China cuts off Wanda funding after overseas buying spree: reports

Sending comment Close