Wanda Sells $320M Stake in Investment Unit to Ex-Evergrande Venture as Bond Comes Due

Dalian Wanda Group has agreed to sell a 49 percent stake in an investment division which holds a stake in its Wanda Film unit for RMB 2.27 billion ($320 million), with reports indicating that the cash raised will go towards repaying a $400 million offshore bond scheduled to mature on Monday.

China Ruyi Holdings, a streaming content operator formerly known as HengTen Networks Group, on Thursday struck a deal to buy the stake in Beijing Wanda Investment, China Ruyi said Sunday in a filing with the Hong Kong stock exchange. HengTen was formed in 2015 as a joint venture of defaulted developer China Evergrande and tech giant Tencent, with Evergrande later exiting in a series of stake sales.

Reuters reported Monday that Wanda, China’s largest commercial real estate developer, would use the proceeds from the Wanda Investment equity disposal to pay off the $400 million bond issued by Dalian Wanda Commercial Management, the group’s main property services arm.

The deal comes after Wanda Investment earlier this month announced the sale of a RMB 2.2 billion ($307 million) stake in Wanda Film, the group’s mainland cinema unit, to Lu Lili, the wife of financial data provider East Money Information’s owner Qi Shi, as reported by Caixin. Wanda Investment owns a 20 percent stake in Shenzhen-listed Wanda Film, which operates the company’s mainland cinemas and produces films.

Fitch Downgrade

Fitch Ratings last Friday downgraded Wanda Commercial’s long-term foreign currency issuer default rating to a C, signalling near-default, after the company on Thursday missed a coupon payment on a separate $400 million bond maturing in 2025. There is a 10-day grace period during which Wanda Commercial expects to make the payment.

Fitch also noted that Wanda Commercial was in the process of preparing sufficient funds to repay the $400 million bond maturing on Monday.

“The bond has no grace period for principal payment, and any missed payment would constitute an event of default,” the agency said.

Led by chairman Wang Jianlin, Wanda is stretching to cover its debts as it struggles with a fourth attempt to list its mall management unit on the Hong Kong bourse. If the unit is not listed by the end of this year, the group will have to buy back all the pre-IPO shares and compensate for investment returns at an estimated overall cost of RMB 40 billion ($5.5 billion), according to S&P Global Ratings.

Passive Investor

China Ruyi said Sunday that it holds “positive views” towards the financial performance and future prospects of Wanda Investment, in which it plans to act as a “passive investor” to indirectly hold listed investments.

Evergrande in June 2021 sold a stake worth $570 million in China Ruyi, then known as HengTen Networks Group, to Ke Liming, the owner of Pumpkin Films, a video app that HengTen bought in 2020. The Shenzhen-based developer led by billionaire Xu Jiayin offloaded its remaining HengTen stake for $270 million in November 2021, with the buyer identified as a vehicle controlled by businesswoman Li Shao Yu.

In August 2021, Pumpkin’s Ke was appointed as executive director and chairman of HengTen, which announced its name change to China Ruyi in January 2022.

Earlier this month, China Ruyi announced a $510 million share sale to Tencent and four offshore entities, with 90 percent of the proceeds earmarked for the development and expansion of the company’s film and gaming businesses.