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China’s Wanda Dismisses AMC Theaters Bankruptcy ‘Rumors’

AMC Theaters and Dalian Wanda logos
Courtesy of AMC Theaters and Dalian Wanda

China’s Dalian Wanda has dismissed talk of the imminent bankruptcy of AMC Theaters as “pure rumors.” The coronavirus outbreak has kept all North American cinemas closed since March.

The Chinese property conglomerate has seen its entertainment investments slashed since 2018. But it remains publicly-traded AMC’s largest single shareholder.

Contacted by Variety on Tuesday, Wanda offered no comment. However, later in the day the privately-held company updated the Chinese-language section of its corporate website with a large image of a microphone and a one sentence statement about AMC.

“Dalian Wanda Group hereby declares that the recent online media speculation that Wanda Media’s AMC cinemas will file for bankruptcy is pure rumor,” it said, in Chinese.

On Tuesday, AMC stock traded 5% higher, finishing at $2.18 per share. At that price it has a market capitalization of $227 million.

Wanda paid $2.6 billion in 2012 to buy AMC outright. It trimmed its stake when AMC had its New York Stock Exchange IPO in 2013. And in September 2018, Wanda agreed a deal with Silver Lake Capital that further cut Wanda’s holding from 60% to 38%.

Wall Street securities analysts are now divided as to whether AMC is past redemption or can still negotiate its way out of trouble.

Wanda’s statement gave no indication of its thinking about its options, such as whether it intends to provide a financial lifeline to AMC to stave off bankruptcy, if it might negotiate with other shareholders to mount a rescue, or whether it would be forced to watch its overseas cinema empire implode. But Wanda’s room for maneuver may be limited.

In early 2018, the Chinese government used multiple policy tools to halt overseas mergers and acquisitions by Chinese companies from the entertainment and property sectors. These included strict foreign exchange controls, which largely remain in place today.

Wanda was additionally required to cut its debt burden. That involved selling nearly all of its overseas real estate portfolio, some hotels and theme parks in China and its iconic film studios at Qingdao, on China’s East Coast.

Between 2012 and 2017 Wanda had been a voracious bidder for Hollywood and other movie industry assets. It failed in its attempt to buy Dick Clark Productions, but in 2016 agreed to pay up to $3.5 billion for Legendary Entertainment. Wanda saw itself as building a global movie industry empire to rival Disney.

As the largest cinema operator in China, Wanda imagined a multinational collection of theater chains as the foundation of that empire. It acquired a large Beverly Hills property that it once touted as its movie sector headquarters, and said that it would also like to buy equity stakes in Hollywood studios.

In addition to AMC, Wanda bought Australia’s Hoyts cinema chain. And AMC was used to buy two of West Europe’s largest theater operators, Odeon-UCI and Nordic Cinema Group. At its high point, Wanda’s worldwide collection of cinemas is understood to have numbered 15,700 screens.