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January 30, 2018

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Tencent-led group to buy Wanda Commercial stake

CHINESE conglomerate Dalian Wanda Group said yesterday that its debt-laden commercial property arm will receive a boost from a group of investors led by technology giant Tencent Holdings, who will buy a 14 percent stake in the company.

The investors, which also include retailer Suning Commerce Group, e-commerce company Inc and property developer Sunac China, will buy the stake for 34 billion yuan (US$5.37 billion) from investors who purchased the interest when the company was delisted from the Hong Kong bourse with a view to relisting “as soon as possible.”

In a separate statement, Suning said it will contribute 9.5 billion yuan for a 3.91 percent stake in Wanda Commercial.

The new infusion of cash will also herald a strategic shift in the nature of the subsidiary, Dalian Wanda Commercial Property.

In a statement yesterday evening, Wanda Group said that, after the introduction of the new strategic investors, Wanda Commercial will be renamed Wanda Commercial Management Group and will aim to complete previously earmarked asset sales in the next one to two years.

“Going forward, it will stop engaging in property development and will transform into a company solely focused on commercial management,” Wanda Group said.

As the core holding company at the center of Dalian Wanda Group, DWCP contains the majority of Wanda’s land reserves and commercial real estate.

The deal will help Wanda Commercial to relieve imminent capital pressure to repay the old investors in the buyout fund created for the delisting. Those investors were promised up to 12 percent annual interest if Wanda Commercial failed to relist in Shanghai within two years.

The company was delisted in 2016 when Wanda Group took it private with a US$4.4 billion fund while planning to relist in Shanghai in the hope of achieving better share price performance.

Wanda Commercial needs to make a US$510 million payment on a syndicated loan by the end of March. It has a further US$1 billion to repay by the end of May and has US$600 million in offshore notes due in November, ratings agencies have said.

Wanda Group said earlier yesterday that it will receive HK$10.32 billion (US$1.3 billion) from the disposal of London, Sydney and Gold Coast developments.

Last year Wanda sold a portfolio of domestic hotels and tourism assets, including 13 theme parks, for US$9 billion to Sunac and Guangzhou R&F Properties. Wanda Commercial operated 235 Wanda Plazas in China as of the end of last year.

Two years ago, Wanda began pursuing an “asset light” strategy in which the company oversees the financing, construction and operation of mixed-use properties but does not own them outright.


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