Bloomberg reported that real estate, infrastructure and investment group Oceanwide Holdings and film and TV producer Zhejiang Huace unloaded their shares, worth a combined $236 million. They had bought their stakes in a $1.5 billion March 2016 funding round conducted by Wanda shortly after it completed its takeover of Legendary. At the time of the refinancing, Wanda offered investors a choice of exits: an IPO for the company within 12 months, or a repurchase by Wanda with a 15% return.
Much has happened in the intervening 18 months to change investor sentiment toward both Wanda and Legendary.
Wanda has been hit by a series of Chinese government moves to control its overseas acquisition spree. Authorities first imposed capital controls that squashed several deals by Chinese groups, including Wanda’s attempt to buy Dick Clark Productions for $1 billion. More recently, regulators have crimped Chinese bank lending to Wanda and its overseas subsidiaries, including Legendary. That was followed last month by a Cabinet-level directive to halt overseas deal-making in film, sports and hotels – all key growth areas for Wanda.
Legendary, too, has seen big changes. It released “Warcraft,” “Kong: Skull Island,” and the Matt Damon-starring “The Great Wall.” Each performed strongly in China, where other Wanda entities, notably its market-leading cinema chain, were able to support the releases. But the titles disappointed in other territories.
Legendary’s founder, Thomas Tull, exited the company in January this year. Peter Loehr, CEO of the Chinese arm, Legendary East, departed at the end of June. The company is now headed by Mary Parent and senior Wanda VP Jack Gao as interim CEO. It has been reported that Wanda has approached attorney Josh Grode to take over as CEO, though the appointment has not yet been confirmed.
Legendary has tried distancing itself from Wanda’s turmoils back in China. “Legendary is well capitalized with liquidity to fund its film and TV slates and operate its business as usual,” Legendary said in a statement in July, while adding that the company “has not experienced any change in its relationship with Wanda.”
Legendary’s losses, believed to amount to hundred of millions of dollars last year, and the Chinese regulatory moves are among the issues that made it close to impossible for Legendary to achieve a share listing. Wanda Film Holdings, the Shenzhen-listed company that contains many of Dalian Wanda’s movie business assets, has seen its shares suspended since July as it battles regulatory headwinds and attempts a restructuring.