China’s Dalian Wanda on Wednesday altered the terms of its proposed selloff of theme parks and 77 hotels, upping the price of the deal and changing the buyer of the hotels.
Wanda said the hotels would now be sold to Guangzhou-based R&F Properties instead of developer Sunac China, which was originally announced as the sole buyer of both the parks and the hotels. Wanda also raised the price of the parks from $4.29 billion (RMB 29.6 billion) to $6.34 billion (RMB 43.8 billion), and said it would no longer arrange vendor financing to help Sunac with the purchase.
The price tag of the deal for 91% stake in the hotels was reduced to $2.88 billion (RMB 19.9 billion). That puts the total value of the various sales at $9.22 billion ($63.7 billion).
According to a joint statement from the three companies, Sunac has already paid a first installment of $2.17 billion (RMB 15 billion).
Wanda surprised markets last week with the announcement of the $9.3-billion theme parks and hotels sale to Sunac, a move designed to ease Wanda’s debt burden. The sale triggered a wave of interest in Wanda’s financial position that only increased when, a day later, Sunac disclosed that Wanda would help it procure loans worth roughly half of the sale price, casting doubt on the extent of the expected debt reduction.
Since then, documents have emerged apparently showing that the Chinese government has ordered banks to cease lending to Wanda in relation to six of its overseas acquisitions.
The practical consequences for Wanda of the lending ban are still unclear, but the symbolic cost has been high. The sprawling conglomerate, which has traded on its political connections and made chairman Wang Jianlin a personal fortune estimated at $30 billion, is now clearly and suddenly in a tenuous position.
That has caused sharp fluctuations in the value of Wanda’s market-traded debt and affected the share price of those listed subsidiaries that are currently trading. Its Wanda Film Holdings unit was suspended from trading last week ahead of a restructuring and refinancing that is to be announced by Aug. 3. Wanda’s ability to pull off that merger and share sale is now being questioned by financial analysts.
Last week’s parks-and-hotels deal also cast growing doubt on Sunac’s finances. Its commercial debt was downgraded by ratings agencies. It has been highly acquisitive in the past two years and has also invested in the troubled LeEco entertainment and technology group.
Vivienne Chow in Hong Kong also contributed to this report.