China may punish Wanda over overseas investments

Virginia Carter
July 18, 2017

Dalian Wanda Group was once the standard-bearer for Chinese companies investing overseas as the mall builder headed by Wang Jianlin bought up everything from trophy buildings to cinema chains in a global expansion drive.

The government is increasing a crackdown on capital outflows in a politically sensitive year in China.

The company, owned by billionaire Wang Jinanlin, began as a real estate company but has moved into worldwide acquisitions that include U.S.

Other Wanda deals included in the order were: USA exhibitor Carmike Cinemas, U.K. yacht maker Sunseeker International, Europe's largest movie theater chain Odeon & UCI Cinemas Group, and Stockholm-based Nordic Cinema Group.

Wanda’s Wang and Sunac’s Sun teamed up on China’s biggest ever property deal last week
Wanda’s Wang and Sunac’s Sun teamed up on China’s biggest ever property deal last week

The paper said on Monday that the country's banking regulators had met with executives of China's state-owned lenders on June 20 and had advised them that six of Wanda's foreign acquisitions, including the acquisition of Legendary Entertainment for $3.5 billion last year and 2012's buyout of AMC Entertainment, were "subject to government capital restrictions enacted last year".

The two remaining deals, for European theater operators Odeon & UCI Cinemas Group and Nordic Cinema Group, have not yet closed.

Chinese regulators have ordered local banks to stop loans to property-to-entertainment giant Dalian Wanda Group, according to the Wall Street Journal.

China announced tighter capital controls last November in a bid to curb its companies overseas acquisitions and slow down the massive capital flight that was causing concern to authorities. But a source tells the Journal that the new regulatory actions can be expected to prevent Wanda from generating new financing in China for the four past transactions, as well as the two that are pending. The decision also reportedly bans Wanda from injecting any of its foreign assets into its listed company in China. Standard & Poor's marked down the company to BB+ while downgrading its parent conglomerate, Wanda Group, in a review of the group's credit last December.

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