Wanda Hotel Development Co., a unit of Chinese billionaire Wang Jianlin’s business empire, has agreed to sell its 90% stake in a Chicago property project for $270 million to help cut debt, according to a filing. Shares surged in Hong Kong.
The subsidiary of Dalian Wanda Group Co., Wang’s retail-to-entertainment conglomerate, will sell its holdings in the hotel-and-residential development known as Vista Tower to its Illinois-based partner, Magellan Parcel C/D LLC, Wanda told the Hong Kong stock exchange Thursday. Magellan owns the remaining 10% of the project.
The disposal is expected to result in a gain of about HK$94 million ($12.1 million) before taxes on paper, the company said.
Wanda Group, which once aspired to rival Walt Disney Co. in entertainment, has been offloading assets after a debt-fueled shopping binge between 2012 and 2016 when the group snapped up European football clubs, properties in Beverly Hills and Hollywood studios. The group’s businesses such as cinemas and theme parks have been particularly challenged this year by the coronavirus pandemic. The Vista Tower disposal can help Wanda Hotel strengthen its financial position, the company said in the filing.
Wanda Hotel’s stock jumped as much as 43% Thursday to 38 Hong Kong cents in resumed trading following a three-day suspension pending the announcement.
In March, Wanda Sports Group Co. agreed to sell its Ironman triathlon business for $730 million in cash. Wanda Group has also exited real estate projects in London and Australia, and disposed of stakes in flashier assets like Spanish soccer club Atletico Madrid. It has also reduced its holdings in AMC Entertainment Holdings Inc., the biggest cinema chain in the U.S.
Wanda acquired its stake in the Chicago project in 2014 and planned to invest $900 million in developing the site into a 101-story tower with about 393 apartments and a hotel. In 2017, the group said it was looking at options for its overseas properties, including Vista Tower.
Wanda Group had total debts of nearly 20 billion yuan (US$2.9 billion) at the end of March, including 12 billion yuan in short-term nature, according to the latest report by local rating agency, China Chengxin International Credit Rating.
Meanwhile its flagship unit, Dalian Wanda Commercial Management Group, which manages core assets including hotels, shopping malls and other properties, had total debts of 297.9 billion yuan as of end of 2019, more than four times its cash and cash equivalents, according to the company’s filing in April this year.
Shares of Wanda Hotel Development surged as much as 88 per cent to HK$0.50 on Thursday after trading resumed following a three-day suspension pending the announcement.
Dalian Wanda Group had joined a wave of Chinese companies that sought ambitious overseas investments between 2012 and 2016. They hoped to brand themselves as global names, learn from overseas partners and diversify beyond an increasingly crowded domestic market.
Wang, estimated to be worth $14.3 billion, is the founder and chairman of Dalian Wanda Group. He had become China’s richest man at more than twice that amount by arriving early to China’s commercial real estate boom in the 1990s and later transformed the group into a global entertainment empire.