Dalian Wanda is negotiating an offshore loan to repay a $350 million debt due in March

On February 1, The Paper (www.thepaper.cn) learned that Dalian Wanda Group was negotiating an overseas loan with a domestic financial institution to repay a US$350 million bond due in March.

According to The Paper, Dalian Wanda Group will use its domestic assets as collateral, and if it can finally obtain a loan, Wanda will raise about US$350 million from the loan amount. But as of now, details about the loan have not been disclosed to investors and may change eventually.

It is worth mentioning that on January 13 this year, Dalian Wanda Commercial Management Group Co., Ltd. planned to issue Reg S, 2-year, senior unsecured bonds denominated in US dollars. This is the first public book-entry transaction from a Chinese-funded real estate issuer since November 2021.

The scale of the bond issue is 400 million US dollars, the term is 2 years, the annual interest rate of the bond is 11%, and the yield is 12.375%. The delivery date is January 20, 2023, and the maturity date is January 20, 2025. The bonds will be listed on the Singapore Exchange. Moody’s and Fitch granted Ba3 and BB issue ratings respectively.

The bond was issued by Wanda Properties Overseas Limited, a wholly-owned subsidiary of Wanda Commercial, guaranteed by Wanda Commercial Real Estate (Hong Kong) Co., Ltd., Wanda Real Estate Investment Co., Ltd. and Wanda Commercial Real Estate Overseas Co., Ltd., and Wanda Commercial provided a keepwell agreement ( A legal agreement between the parent company and one of its subsidiaries) and a share purchase deed, with an expected issue rating of Ba3/BB. The proceeds will be used to refinance the Group’s existing debt and for general corporate purposes.

Moody’s analysts said the proposed bond issuance would prolong Wanda Commercial’s and Wanda-related debt maturities and would not have a material impact on its credit metrics, as Wanda Commercial would mainly use the proceeds to refinance its offshore debt. Moody’s expects Wanda Commercial’s operations to resume gradually in 2023.

Fitch believes the company’s liquidity is adequate, as most of its short-term debt is in onshore bank loans and Wanda Group’s funding channels remain strong. In addition, Wanda Group plans to borrow new bank loans or use about $1.5 billion in cash from the disposal of offshore subsidiaries. On July 23 this year, Wanda Commercial Management will mature a US dollar bond with a principal of US$400 million and an interest rate of 6.88%.

Just in January this year, Wang Jianlin, chairman of Dalian Wanda Group, mortgaged 65.04% of the shares of Wanda Hotel Development (00169.HK) controlled by him to Temasek for financing.

According to the information disclosed by the Hong Kong Stock Exchange, Singapore’s sovereign fund Temasek has held 65.04% of the shares of Wanda Hotel Development on January 11, and the number of shares held is 3066043100 shares. Temasek’s subsidiaries provide loans to Wanda Culture Holding Co. Limited , and at the same time obtained the shares of Wanda Hotel Development as a guarantee.

According to Wanda Hotel Development’s 2022 semi-annual report data, in the first half of 2022, Wanda Hotel Development realized a revenue of HK$355 million, a year-on-year decrease of 14.4%; gross profit was about 168 million yuan, a year-on-year decrease of about 32.27%; %; the net profit attributable to owners of the parent company was HK$63.745 million, a year-on-year decrease of 33.2%. The company’s total assets were 5.255 billion yuan, a year-on-year decrease of 23.84%. Regarding the reason for the decline in gross profit margin, Wanda Hotel Development stated in its semi-annual report that the decline in gross profit and gross profit margin was mainly due to the management fee of about HK$12.7 million in entrusted management services provided by Zhuhai Wanda to the Guilin project during the period.