In a spot of relief for Dalian Wanda from the storm surrounding its finances and overseas expansion, China’s currency regulator has issued a notice saying that it supports the legitimate use of domestic assets to obtain overseas loans.
The State Administration of Foreign Exchange, or SAFE, had issued a series of statements last November and December targeting irrational and “exuberant” expansion in sectors such as entertainment, which triggered a sharp slowdown in overseas acquisitions by several Chinese companies. Wanda’s deal to acquire Dick Clark Productions and Xinke’s deal to acquire Voltage Pictures both collapsed, apparently tripped up by the capital controls imposed by SAFE.
In recent weeks, it has emerged that property-to entertainment giant Wanda is being punished by regulators for breaching those controls. State banks have been ordered to cease lending to six of Wanda’s units, and not to accept those units’ assets as security.
The new notice from SAFE, dated Wednesday, indicated that foreign deals have not been completely banned, but it nevertheless contained a warning. “At the same time, SAFE will strengthen financial market supervision with other financial regulators and guide financial institutions to strengthen compliance management and risk management of internal and external loans,” the notice said. “It will crack down on false guarantees and malicious guarantees and other irregularities, and promote the healthy development of the domestic and foreign loans business.”
On Thursday, the highly acquisitive insurer Anbang said that it, too, had received some regulatory comfort. Ending days of rumors about forced asset sales, the China Insurance Regulatory Commission issued a notice saying that it has no plans to ask Anbang to dispose of its overseas acquisitions. Anbang, Fosun, Wanda and HNA were among the leading conglomerates singled out by regulators for having overstepped the mark.
Wanda responded to the regulatory intervention by agreeing to sell some $9 billion of theme parks and related developments to Sunac China, and a portfolio of hotels to another financial group. The deal will allow Wanda to ease its debt burden while continuing to operate the properties under its brand name and retain a 9% equity stake.
It has emerged that Wanda Studios Qingdao, the giant studio, film school and festival complex, is among the properties being sold to Sunac. Other sources report that Wanda may now be negotiating with Sunac to buy back the Qingdao businesses.