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Sunac to pay US$9.3bn in Wanda deal

12 July 2017, 12:42 | Melanie Burgess

The group's owner is the second-richest man in China


It is China's largest-ever property deal, according to Bloomberg News, and will see Sunac (HKSE: 1918-OL.HK - news) buy 76 hotels outright and take a 91 percent stake in 13 other "cultural and tourism projects" within China, the companies said.

Sunac yesterday halted trading of its shares in Hong Kong pending an announcement of a "very substantial" acquisition, it said.

The developer closed 6.9 percent lower on Friday. Sunac China said in a filing to the Hong Kong bourse on Tuesday that the final payment of 29.57 billion yuan to complete the deal will be made within two days after it receives a loan worth 29.6 billion yuan, funded by Wanda.

Sunac invested in companies affiliated with the cash-strapped LeEco (樂視) empire, as Sun has said that he is seeking ways to expand beyond property into areas from healthcare to finance. Last August, Wanda signed a $9.3-billion co-development deal to build a sports-themed park in the city of Jinan, to include a 10,000-seat stadium, a mall, hotels, and other facilities.

With the latest deal, Sun targeted assets from fellow billionaire Wang Jianlin (王健林), who was among the most acquisitive Chinese tycoons up till a year ago.

After the deal, Wanda will still be responsible for the operation of the properties, and Sunac will pay an annual management consulting fee for 13 theme parks of 50 million yuan each to Wanda for a contract term of 20 years, according to the statement.

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Sunac's stock has soared nearly 130 percent this year.

Wanda has been among the most active private Chinese companies investing overseas.

"Through this asset transfer, Wanda Commercial's debt ratio will be greatly reduced, all the proceeds will be used to repay loans".

By lending funds to Sunac, Wanda is turning part of its equity interest into loan interest, said Chen Shujin, chief financial analyst with Hong Kong-based Huatai Financial Holdings.

Analysts said if Wanda continues to apply for the relisting as a "property company" it would be hard to get approval due to China's property market clampdown.

S&P downgraded Wanda Commercial in December citing rising financial leverage and slower-than-expected asset disposal at China's largest commercial developer.

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