Regulators at the Shenzhen Stock Exchange, where Wanda Cinema shares are traded, have asked for more disclosure, according to China Money Network.
The market operators appear to be concerned by the high valuation of the deal and by the identity of the companies co-investing in Wanda Media alongside Wanda Cinema Line.
In a filing on May 12 Wanda Cinema Line listed the names of some 33 companies that were part of the buyout. The regulator appears to want to know more about the people behind the companies and their sources of finance. At issue may be the notion that if too many companies are involved, the share issue might no longer be considered a private placing, but rather a public offering.
If that were the case, more disclosure about the businesses being acquired could be required and the offer might have to be opened to other investors.
Parent company, Dalian Wanda announced its proposed acquisition of Legendary, for up to $3.5 billion, in early January. at the time chairman Wang Jianlin indicated the possibility of a separate share listing for the film production and distribution activities. However, he quickly issued a prospectus for Wanda Media and attracted investment promises from a string of institutional investors.
On Friday (May 20, 2016) Wanda Cinema Line said that its shares would “remain suspended pending the exchange’s review of its asset restructuring proposal.” It has issued similar notices every week since February when share trading was halted. The company did not respond to Variety‘s inquiries.