China’s property-to-entertainment conglomerate Dalian Wanda Group is looking to raise money by potentially selling off part of its stake in AMC Entertainment Holdings, the world’s largest cinema operator, Reuters reported, citing an unnamed insider.
Wanda is said to be exploring a deal that potentially involves private equity firms Silver Lake Partners and Apollo Global Management buying hundreds of millions of dollars in convertible bonds to acquire part of Wanda’s existing 60 percent stake in the theatre chain.
Wang Jianlin Steps Back From First North American Deal
Wanda bought 100 percent of AMC for US$2.6 billion in 2012 , even though it was valued for only $1.5 billion at the time. The Chinese group maintained an 80 percent stake after AMC’s US$1.7 billion IPO in 2013.
According to Reuters, Wanda aims to retain control after any deal, although it is unclear how the company intends to do so. A convertible bond can be converted into a predetermined amount of the company’s equity usually at the discretion of the bond holder. As part of the agreement, Silver Lake and Apollo, which was an AMC investor prior to Wanda’s takeover, could obtain board representation in the theater operator, said Reuters.
As of the publishing date of this article, none of the companies mentioned in the Reuters report have commented publicly on the potential deal. The news agency cautioned through its source that no deal is certain and that the negotiations are confidential.
Wanda Continues Offshore Sell-Off
The bond sale plan is seen as the latest sign of financial restructuring for Dalian Wanda Group, whose billionaire chairman Wang Jianlin was once China’s richest man, continuing to scale back its overseas empire.
Wanda sold its flagship billion-dollar London project at a loss of nearly £30 million in January, followed by the disposal of the Sydney and Gold Coast developments. The company has been under pressure to reduce its debts since mainland financial regulators targeted Wanda, HNA and other major cross-border investors last year in a crackdown on outbound capital flows.
In its transition from China’s leading property developer to a major Hollywood player, Wanda acquired not only the cinema chain AMC Entertainment, but also attempted to pick up the well-known Dick Clark Productions of the Miss America beauty pageant and the Golden Globe Awards. The company, however, has been on financial strains after China’s regulators ordered the banks to stop providing funding for Chinese conglomerates on overseas acquisitions last year. Reuters reported two weeks ago that Wanda borrowed a three-year offshore loan of up to US$800 million for refinancing and working capital.