Sunac China Holdings – which purchased a large part of Wanda’s attractions portfolio in July – will have any future lendings suspended, according to reports in China.
The South China Post reported that China Huarong Asset Management, one of the country’s 'big four' state-owned banks, ordered the suspension of new lending to Sunac due to concerns over high debt levels, something it said was confirmed by Huarong executives.
Chaired by property magnate Sun Hongbin, Sunac’s “aggressive expansion” had been cause for concern to the bank’s risk department, which also called for “heightened risk monitoring and attention to existing loans”, according to the report.
A statement from Sunac said: “The attention paid to Sunac was China Huarong’s normal client management behavior [sic]. China Huarong didn’t cease business cooperation with Sunac, and under the precondition of risks being controllable, China Huarong will continue to maintain its cooperation with Sunac.”
In July Sunac agreed a deal with Wanda worth CN¥63.18bn (US$9.3bn, €8.15bn, £7.22bn), with the terms of the deal seeing Sunac acquire the majority of Wanda’s theme park and hotel portfolio. Wanda loaned the purchaser CN¥29.6bn (US$4.3bn, €3.76bn, £3.32bn) to push the deal through.
The terms of the sale then changed, with Guangzhou-based R&F Properties acquiring Wanda’s portfolio of 77 hotels instead of Sunac –
and Sunac paying CN¥43.8bn (US$6.47bn, €5.62bn, £4.99bn) to acquire its portfolio of 13 theme parks and leisure complexes. The new deal did not include Wanda assisting with the vendor financing for the Sunac purchase.
China has adopted a strict policy on such deals, initiating a series of measures to keep a check on financial risks, with Wanda feeling the sting following its heavy investment in entertainment, tourism and financial ventures.
Wanda’s dealings attracted the attention of Chinese regulators, who in June ordered lenders to assess exposures to overseas deals for the company along with three other businesses.
Since the Wanda-Sunac deal was announced, documents have emerged online that reportedly show the Chinese government ordering its banks to cease lending with Wanda on six of its overseas acquisitions.
