Wang Jianlin’s Dalian Wanda trimmed off another slice of the billionaire’s fading overseas empire last week when the property-to-entertainment conglomerate reached a $600 million agreement to hand over a stake in AMC Entertainment to private equity firm Silver Lake.
According to a statement released by AMC on Friday, the world’s biggest theatre operator has agreed to issue $600 million of senior unsecured convertible notes to the Silicon Valley-based firm. A portion of the proceeds – about $421 million – from the convertible bond are to be used by AMC to repurchase 24,057,143 shares from Wanda’s 60 percent stake in the cinema owner.
Wanda’s pull-back follows its sell-off of multiple overseas real estate investments in the past year, as the company joins a group of one-time mainland mega-investors who are rapidly reducing their overseas obligations.
Rumoured Sale Becomes Reality
Wanda’s potential deal with Silver Lake was first rumoured earlier this month when reports surfaced of the Beijing-based developer of more than 200 mainland shopping malls was said to be paring back its stake in the company’s first US investment.
Following the transaction, Wanda’s stake will be reduced to about 38 percent of AMC shares. As part of the deal, Silver Lake will get a seat on AMC’s board and a two-year right of first refusal on certain future transfers of AMC shares by Wanda.
The notes, which are set to mature in 2024 carry an interest rate of 2.95 percent and are convertible into AMC Class A common shares at $20.50 per share.
AMC also said that on September 28, it will also pay a special dividend to $1.55 a share to all Class A and Class B shareholders – although it won’t apply to the Wanda shares being repurchased.
AMC Welcomes Silver Lake Role
“We expect that Silver Lake will add significant value to AMC as it comes into our Boardroom, given its longstanding experience and savvy in the technology and media sectors,” Adam Aron, AMC CEO and president said in a statement.
Aron also praised for Wanda’s longstanding commitment to AMC and added that (Wanda is) expected to “remain a sizable and supportive shareholder for AMC into the future.”
Wanda Still Bailing Out Balance Sheet After Cross-Border Binge
Wanda bought 100 percent of the Kansas-based theatre company for $2.6 billion in 2012, as part of its global expansion into entertainment and maintained an 80 percent stake after AMC’s $1.7 billion IPO in 2013. The Chinese group’s ambition was, however, forced to scale back as Chinese authorities targeted Wanda, HNA and other major cross-border investors last year in a crackdown on outbound capital flows.
Wanda has since been under pressure to reduce its debts by continuing to offload both the domestic and the overseas assets.
The high-profile company, chaired by billionaire Wang Jianlin, 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. It reportedly borrowed a three-year offshore loan of up to $800 million in August for refinancing and working capital, according to Reuters.