Bloomberg
China tycoon, who lost $ 32 billion, is trying to save an empire
(Bloomberg) – Wang Jianlin, formerly Asia’s richest person, was busy expanding his Dalian Wanda Group Co. by acquiring trophy assets overseas. All of this is supported by simple loans. Now the 66-year-old isn’t even in China’s top 30 richest people have lost about $ 32 billion of his personal wealth in less than six years – most of it for any tycoon during that time. As Wang attempts to slash the group’s total debt by 362 billion yuan ($ 56 billion) and turn his entertainment empire around, he sees skeptical bond investors that bonds were among the first to fall earlier this month as a wider decline saw the Asian one Credit market met. The sell-off, fueled in part by concerns about the impending payments, was a warning from investors eager to see how Wang will manage to keep his group away from the debt risks posed by peers like HNA Group Co., China Evergrande Group and Anbang Group Holdings Co. “Group liquidity is an important consideration for investors,” said Dan Wang, an analyst at Bloomberg Intelligence. A representative from Wanda did not respond to requests for comment on the debt risks. Wandas Wang, who once binge-bought Spanish football club Atletico Madrid and wanted to compete with Walt Disney Co., is still losing some of those assets. The last came last week when Wanda gave up control of AMC Entertainment Holdings Inc., which now accounts for less than 10% of the world’s largest cinema chain. The chief executive officer said the company is run by a broad group of shareholders and the stock has risen more than 42% in the past three days. Despite divestments following government crackdown on credit-related expansion, the Wanda Group’s indebtedness soared to its highest level since 2017 in June. The pandemic only exacerbated problems and dealt a blow to cinemas, shopping malls, theme parks, hotels and sports throughout China With its economy stabilized after the virus containment, the reopening of movie theaters and shopping malls provides Wang with much-needed time to stabilize his ship. He is driving a strategy he has advocated for years, known as the “asset-light” model, to reduce leverage. This means spending less by reducing land purchases. Dalian Wanda Commercial Management Group Co., one of the world’s largest mall operators, which accounts for nearly half of the group’s sales, will stop buying land this year and instead license its brand to partners, the company’s president said, Xiao Guangrui, told the mainland media in September No Alternative “Wanda had no real alternative to its new asset-light strategy,” said Brock Silvers, chief investment officer at Kaiyuan Capital in Hong Kong, which has no Wanda shares or bonds holds. “The company’s debts were unsustainable.” The impact of the pandemic on Wanda has been astounding. The film producer and cinema operator Wanda Film Holding Co. said it may have posted a record loss of $ 1 billion last year. Although AMC became a favorite in the recent Reddit-powered stock rally, it warned several times that it was on the verge of bankruptcy and reported its worst annual loss to date, when sales fell 77%. Wanda Commercial Management announced that sales and profits were down nearly 50% in the first nine months of 2020, while the Wanda Sports Group Co.’s American depository receipts were delisted in January, after being more than two-thirds since it started trading in July lost their value in 2019. Even if Wanda’s companies get over the global health crisis, there is no assurance that creditors will be kind after developments at other indebted Chinese conglomerates such as HNA, Evergrande and, more recently, Suning Appliance Group Co. In an offering circular in September, Wanda told investors that the Group’s debt may “adversely affect” some businesses. The conglomerate is also facing stricter credit rules in the real estate sector as Chinese regulators try to contain financial risk. Wanda and its units took on around 48.2 billion yuan in local and offshore debt last year, most of it since 2016. Some of that was used. To meet older commitments, the group needs around 20 billion yuan in domestic bonds Fall due in 2021, refinance or repay. While the group’s dollar bonds have nearly offset losses since the tumble earlier this month – their worst week in nearly a year – traders cited concerns about the group’s local bond maturity and a sell-off of some of its onshore debt. Wanda Commercial Management’s debt is rated non-investment grade by Fitch Ratings, S&P Global Ratings and Moody’s Investors Service. In his prime, Wang – a former People’s Liberation Army soldier – flew around in his private Gulfstream G550, paying premium prices on assets like a luxury property in Beverly Hills, Hollywood studio Legendary Entertainment, and O. ne Nine Elms in London, one of the tallest residential towers Europe. Its fortunes jumped when China began cracking down on such expansion and capital outflows. His net worth has shrunk from a high of $ 46 billion in 2015, when he was crowned the richest person in Asia according to the Bloomberg Billionaires Index, to around $ 14 billion. “The company has since been mining assets faster than other conglomerates, but it is still a long way off.” The asset-light strategy would help generate sustainable recurring rental income for Wanda Commercial Management, the group’s “cash cow”, Chloe He, Fitch’s Corporate Rating Director. It can also prevent the company from making heavy investments and taking on too much debt, she added, “This will be very helpful for them to get rid of debt in the future, provided they don’t invest in anything else,” he said (Updates with AMC shares in the fifth paragraph, Wanda Sports is delisted in the eleventh paragraph) More articles like this can be found at bloomberg.com