Wanda deals in jeopardy as China scrutiny mounts

Bloomberg

China plans to cut off some funding for billionaire Wang Jianlin’s Dalian Wanda Group Co. after
concluding the conglomerate breached restrictions for overseas investments, said people familiar with the decision.
Six investments, such as the purchases of Nordic Cinema Group Holding AB and Carmike Cinemas Inc., were found to have violations, said the people, who asked not to be identified discussing a private matter. The retaliatory measures will include banning banks from providing Wanda with financial support linked to these projects and barring the company from selling those assets to any local companies, the people said.
The move is an unprecedented setback for the country’s second-richest man, who has announced more than $20 billion of deals since the beginning of 2016. By targeting one of the nation’s top businessmen, the government is escalating its broader crackdown on capital outflows and further chilling the prospects of overseas acquisitions during a politically sensitive year in China.
“To investors, political risk is now the biggest concern when investing in Chinese companies,” said Castor Pang, head of research at Core-Pacific Yamaichi HK. “Not only Wanda, every Chinese company won’t find it easy anymore to acquire assets overseas. Stabilizing the yuan is the top priority for
Beijing now.”
A Wanda representative declined to comment. China’s banking regulator didn’t respond to requests for comment and it wasn’t immediately clear which investment rules Wanda breached.
Wanda Properties International Co.’s 2024 notes declined as much as 6.3 cents on the dollar to 98.7 cents in Hong Kong trading on Monday, according to Bloomberg-compiled data. Wanda Hotel Development Co. shares fell as much as 7.3 percent.
Four of the six deals have been completed, according to the people. Besides the bank-financing ban, Wanda will be prohibited from selling those acquired assets to any listed entity in China, infusing capital into those assets from within China or involving them
in any restructuring with any
of Wanda’s domestic units, the
people said.
On the two pending deals,
related authorities won’t prov-
ide support with financing or foreign-exchange-related approvals needed to move money out of China, according to the people.