AMC Entertainment on Tuesday denied reports that funding from its Chinese owner, Dalian Wanda, was used for any of its recent acquisitions. The U.S. theater chain also said that all four of its recent deals to buy Starplex Cinemas, Odeon & UCI, Carmike Cinemas and Nordic Cinema Group had been completed.
The statement came a day after a document emerged suggesting that Chinese regulators had ordered the country’s banks to stop lending money to Wanda to finance the conglomerate’s foreign acquisitions – six deals in particular, including Wanda’s $3.5-billion purchase of Legendary Entertainment.
AMC said it did not use money from parent company Wanda for its own recent expansion.
“AMC has never received committed financing from any bank headquartered in mainland China for any purpose, including for acquisitions,” the company said in a statement. “All committed debt financing for AMC’s three most recent acquisitions [was] funded by a syndicate of U.S.-based banks with AMC as the borrower without financial guarantees or credit enhancements from Wanda. The fourth acquisition was funded by AMC’s available cash on hand.”
AMC Entertainment was acquired by Dalian Wanda in 2012. However, it remains a New York Stock Exchange-listed company.
The document that emerged Monday purportedly came out of a meeting in June between Chinese authorities and executives from leading Chinese banks. The document appeared to have originated from Agricultural Bank of China and was circulated on the Internet on Tuesday before being removed.
It showed instructions to the banks to stop providing finance for the acquired companies, and not to accept their assets as collateral. It also showed Wanda being instructed not to inject its own assets into the six acquired companies, nor to inject any assets from those companies into Wanda’s China-listed subsidiaries.
The document also appeared to indicate that up to two of the six deals had not been completed, but it’s unclear which it meant.
“AMC completed its acquisition of London-based Odeon & UCI Cinemas from private equity firm Terra Firma. The acquisition was completely funded on November 30, 2016, through a combination of AMC’s cash-on-hand, corporate borrowings, and shares of AMC common stock,” AMC said.
AMC said that its acquisition of Stockholm-based Nordic Cinema Group was completed on March 28, 2017 and that the deal had been cleared by the European Commission. “The acquisition was completely funded on March 28, 2017, through a combination of AMC’s cash-on-hand and corporate borrowings. AMC did not receive any financing, guarantees, or credit enhancements from Wanda in conjunction with the acquisition of Nordic, and all debt was incurred by AMC.”
The statement goes on to give details of minor expense reimbursements to Wanda and Wanda’s provision of $10 million of capital in February this year. However, AMC said: “The only current vehicle for making payments by AMC to Wanda is through the issuance of dividends, which are offered equally on a per-share basis to all AMC shareholders.
“Wanda does not actively participate in the day-to-day running of AMC beyond the board of directors service of three Wanda executives side-by-side with six American directors on the AMC board.”