China cracks whip on Wanda Group's overseas acquisitions

Ausiliatrice Cristiano
Luglio 17, 2017

But that shopping spree appears to have come to an abrupt end as China's regulators take aim at some of Wanda's most high-profile overseas deals, according to an account today in the Wall Street Journal.

The government measures include a ban on banks from providing Wanda with financial support, Bloomberg News said, citing sources familiar with the government action.

China's banking regulators met with executives of the country's big state-owned banks on June 20 and advised them that Dalian Wanda's foreign acquisitions were subject to the capital restrictions imposed by the government past year, the journal reported, citing a document from one on the participating banks.

The Chinese government blocked banks from lending to entertainment conglomerate Dalian Wanda Group, sources close to the decision said. In an effort to stem capital flight, which was seen as contributing to a devaluation of China's battered currency, the government upped scrutiny of large transactions and instituted various measures to make it more hard for acquirers to shift capital overseas.

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

The reported crackdown on Wanda's overseas deals came shortly after China's banking regulator told some of the country's biggest lenders to review borrowing by Wanda along with two other mainland mega-investors, HNA Group and Fosun International, and Rossoneri Sport Investment (which bought an Italian soccer club AC Milan for $828 million last year).

Banks have been told not to finance the deals or to allow Wanda to use its offshore assets as collateral for financing. The instructions were handed down by the China Banking Regulatory Commission in early June.

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.

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