Thanks to Reddit’s traders, Wang Jianlin turns AMC stake from a drain into a US$675 million gain
- Wanda has now sold stake worth about US$1.5 billion
- Conglomerate acquired US cinema chain for US$700 million and US$1.9 billion in debt in 2012
As of Sunday, the company has sold stake worth a total of about US$1.5 billion and retained a 0.002 per cent holding, making a gain of about US$675 million including dividends since 2012, according to a Bloomberg analysis. It held a 6.8 per cent stake as of April 9, according to a stock exchange disclosure. The Chinese company has completely exited AMC’s board.
The AMC stake sale is the latest instance of Wanda offloading assets under pressure from Beijing, which wants it to pare back its overseas holdings and debt. The company was placed on a watch list by regulators in 2017 along with Anbang Group, Fosun Group and HNA Group. These privately controlled Chinese conglomerates had accumulated some of the world’s largest debts after snapping up overseas trophy assets, often at premium prices, and were facing significant debt maturities.
The acquisition came amid a highly leveraged shopping spree around the world by Wanda, which snapped up Hollywood studios, luxury hotels and European football clubs. The Chinese conglomerate took AMC public through an initial public offering on the New York Stock Exchange in 2013.
“Under their ownership, AMC became the biggest cinema operator in the world. Importantly, Wanda also has supported our reinvestment of billions of dollars to upgrade and enhance our network of theatres for the benefit of film-goers throughout the United States, Europe and the Middle East,” Adam Aron, AMC’s chief executive and president, said in a filing about Wanda’s stake sale made on Friday.
The cinema chain reported a net loss of US$4.6 billion for 2020 while revenues fell 77.3 per cent to US$1.2 billion. AMC is among businesses worst hit by the Covid-19 pandemic, because of the resulting lockdown restrictions that necessitated theatre closures, it said in its filing to the New York Stock Exchange on Friday.
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Wanda looks to sell most of its overseas properties
Wanda’s stake sale “could be the strategy for the short future” for the company, said Wilson Chow, global technology, media and telecommunications leader at PwC. “After all, the mainland market is more promising while in most other parts of the world, the cinema market has been badly hit by Covid-19 because of social distancing restrictions. Even though some cinemas are open up, they are operating in a restricted mode. For example, people need to be with masks on all the time. No eating and drinking and the salon cannot be fully occupied,” Chow added.