Wanda Group Fully Withdraws From AMC in Nearly $1.5 Billion Stock Liquidation

Chinese investment firm Wanda Group has sold off the majority of its stake in AMC Theatres, exiting the U.S. movie theatre business.

Dalian Wanda Group, owned by former Chinese Tycoon Wang Jianling, announced on its official website that, as of May, it has officially liquidated all its assets in AMC Entertainment Holdings Inc. and resigned their chairperson seat on AMC’s board of directors.

Wanda, which had a controlling stake in the massive U.S. theater chain, received a cumulative return of $1.476 billion. According to Wanda, this is double the amount of its initial investment, which it says was $700 million.

In the public announcement, Wanda broadcast its achievements after acquiring AMC, which included successfully merging with and listing AMC Inc., making it the largest cinema chain in the world. Other related companies were also acquired, including America’s fourth largest cinema company, Carmike, for $1.2 billion, European cinema chains Odeon & UCI, as well as Nordic Cinema Group.

While Wanda said it had purchased all of AMC’s equity in May 2012 for $700 million, this contradicts the narrative of Chinese media reports, which stated that AMC was acquired for $2.6 billion, including $700 million in cash, $1.9 billion in debt, and $500 million for renovations.

Chinese media quoted Wanda as saying that Wanda’s cash investment was indeed $700 million, while the $1.9 billion debt was an obligation still belonging to AMC, and the equipment renovation of $500 million was paid off by funds raised following AMC’s listing.

Pandemic Nearly Bankrupted AMC

In 2018, Wanda had already begun selling AMC’s equity shares. However, the world’s largest cinema chain took a hard blow after the CCP (Chinese Communist Party) virus pandemic. AMC’s stock on the New York Stock Exchange plummeted to $2.12 per share, pushing the company to the verge of bankruptcy.

Things changed when “meme stocks” began appearing early this year as groups of individual investors organized and collectively pumped up certain small stocks, with the most notable case of this being GameStop.

AMC can also be considered a meme stock, since on Jan. 27 of this year, a share of AMC was valued at $19.90. Although the price dropped after that peak, AMC’s stocks still managed to stay above $10—a 500 percent increase from its $2.12 low.

When the closing price hit $16.41 on May 25, Wanda didn’t let the opportunity pass by. Between May 13 and May 18, Wanda reduced its stock holdings in AMC five times, selling at least 30.44 million shares at around $14-15 per share. According to information publicized by Wanda, this translated into $650 million.

The owner of Wanda Group, Wang Jianling, is known as the world’s richest Asian. He started off in real estate where he focused on cultural, recreational, and commercial properties. In 2013, 2015, 2016, and 2017, he ranked first place on Forbes’ list of richest Chinese people. Wang’s assets were once valued at 260 billion yuan ($40.6 billion), surpassing the richest man in Asia at the time, Hong Kong real estate tycoon Li Ka-shing, to become the richest Chinese in the world

Li Hengqing, a scholar at the Washington Institute for Information and Strategy, told The Epoch Times that Wang acquired massive loans in China and converted the loans into U.S. dollars in order to invest overseas. Chinese authorities have recognized this as money laundering by transferring Chinese capital out of the country, which would provide Wang with the opportunity to escape from China at any time.

Li said he believes that Wang and his family members have been barred from travelling abroad, and this probably caused them to sell their overseas assets in order to pay back their old loans.

Wanda’s Overseas Investments Reap Profits

Wanda announced, in its aforementioned public statement, that all of its overseas investments have yielded profits. From the published data, Wanda has indeed made some money while selling its assets. In February 2018 for example, Wanda Group sold all of its 17 percent in shares in Spanish soccer club Atletico Madrid for 50 million euros. They initially purchased the stock for 45 million euros, which translates into a profit of 70 million yuan ($10.93 million).

In January 2018, Wanda sold its real estate project in London for 59 million pounds sterling ($83.53 million), and earned $56.63 million in proceeds.

Also in January 2018, Wanda sold two of its Australian projects for AU$315 million ($245 million), and made a $5.54 million profit in the process.

In November 2018, Wanda sold its One Beverly Hills project in Los Angeles for $420 million.

On July 30, 2020, Wanda announced that it would sell 90 percent of its equity in their Vista Tower in Chicago, now known as St. Regis Chicago, for $270 million, making $12.11 million in the process.

How much profit the latter two projects have reaped is currently unclear, but according to Chinese media, Wanda abandoned its five major overseas real estate projects, and garnered a cumulative return of $1.02 billion.

The report also hinted that Wanda’s overseas real estate investment portfolio, including Chicago’s Vista Tower, St. Regis Chicago, totals about $5 billion, which means that there is a $4 billion gap between the return of funds and the investments.

At present, except for Hoyts, the second largest cinema chain in Australia, and Legendary Entertainment, Wanda has basically sold all of its overseas assets.

May 31, 2021 11:26 pm

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