China may punish Wanda over overseas investments

Brunilde Fioravanti
Luglio 17, 2017

China launched a clampdown on capital outflows and overseas direct investment past year.

The Chinese government blocked banks from lending to entertainment conglomerate Dalian Wanda Group, sources close to the decision said. Relevant government bodies should not provide support to help Wanda sell its overseas assets to Chinese buyers, according to the bank document.

Wanda, which owns a stake in soccer club Atletico Madrid, has over the past few years bought film producer Legendary, theater chains AMC Entertainment Holdings, Odeon & UCI Cinemas and Nordic Cinema Group, as well as a United Kingdom luxury yacht maker.

Other Wanda deals included in the order were USA exhibitor Carmike Cinemas, European cinema chain Odeon & UCI Cinemas Group, Nordic Cinema Group and United Kingdom yacht maker Sunseeker International.

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

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 a year ago, the journal reported, citing a document from one on the participating banks.

A planned $1 billion deal to acquire Dick Clark Productions in 2016 fell through after concerns about capital outflows of Chinese capital.

Chinese banking regulators have ordered the nation's big banks to put the brakes on loans to property giant Dalian Wanda Group, the Wall Street Journal reported on Monday. The regulators are also banning Wanda from using its mainland funds to finance any of the deals, selling any of the foreign assets to China-listed firms or injecting any of the assets into the group's domestic units. The instructions were handed down by the China Banking Regulatory Commission in early June. 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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