Wanda agrees to asset sale to slash debt

shanghai — Chinese conglomerate Wanda said Monday it will sell dozens of hotels and other projects to developer Sunac China Holdings for $9.3 billion to slash debt, two weeks after acknowledging it was being probed following heavy overseas investments.

It is China’s largest-ever property deal, according to Bloomberg News, and will see Sunac buy 76 hotels outright and take a 91 per cent stake in 13 other “cultural and tourism projects” within China, the companies said.

Wanda, headed by one of China’s richest men, Wang Jianlin, was among the more acquisitive players in a flood of Chinese money overseas that raised concerns in Beijing over “irrational” investments.

Wang told financial magazine Caixin the deal would cause debt at Wanda’s commercial property arm to “drop greatly”, without giving specifics.

“The funds returned from this will all be used to pay back loans. Wanda Commercial

Wanda Commercial plans to pay back the majority of bank loans within this year Wang Jianlin, founder of Wanda

plans to pay back the majority of bank loans within this year,” he was quoted saying.

The deal highlights a quandary faced by Chinese corporations that bet big on overseas acquisitions but now face difficulty paying off debts.

Beijing began last year to roll out restrictions to curb overseas capital flight, which analysts said raises funding costs for companies like Wanda because lending to them is now viewed as more risky.

Wanda admitted last month that China’s banking regulator was looking into potentially risky loans it held.

Wanda said other domestic companies that invested aggressively overseas also were being scrutinised, including Rossoneri Sport Investment Lux, a consortium that recently purchased Italian football club AC Milan, Club Med’s owner Fosun Group, and HNA Group. — AFP