China is said to punish Wanda for breaching investment rules

Claudine Rigal
Juillet 17, 2017

China plans to punish billionaire Wang Jianlin's Dalian Wanda Group Co. for breaching the nation's restrictions on overseas investments by cutting off funding and denying the conglomerate with necessary regulatory approvals, according to people familiar with the matter.

Other Wanda deals included in the order were USA exhibitor Carmike Cinemas, European cinema chain Odeon & UCI Cinemas Group, Nordic Cinema Group and United Kingdom yacht maker Sunseeker International.

Four of those deals already closed months ago, and the two remaining transactions - the buyouts of Odeon and Nordic - are being executed by Wanda's US -based AMC unit, which trades on the New York Stock Exchange and would appear to be outside the reach of Chinese regulators.

The move represents an unprecedented setback for China's second-richest man, who was among the country's most prominent dealmakers up until past year by gobbling up Hollywood assets such as "Kong: Skull Island" producer Legendary Entertainment.

By blocking Wanda's access to local bank loans, it would appear to prevent the company from getting new financing in connection to deals already closed and would further cloud financing for the two deals not yet closed, a source told Wall Street Journal. In an effort to stem capital flight, which was seen as contributing to a devaluation of China's battered currency, the government upped scrutiny of large transactions and instituted various measures to make it more hard for acquirers to shift capital overseas.

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