January 19, 2018 / 4:30 AM / 3 months ago

China's Wanda to soon announce sale of Australia projects: sources

HONG KONG (Reuters) - Dalian Wanda Group is expected to announce the sale of two Australian property projects in the coming days, people with knowledge of the matter said, as the Chinese firm looks to lessen financial strains caused by a major acquisition spree.

A sale of the projects, reported by The Australian newspaper to be worth A$1 billion ($800 million), would follow an agreement to sell interests in a high-profile London property development and would help the group meet upcoming debt deadlines. Though how it will manage other debt due later in the year is less clear.

China’s regulators last year told banks to stop providing funding for several of Wanda’s overseas acquisitions, sources have said, part of a crackdown on what Beijing sees as irrational spending by some domestic conglomerates. Since then, Wanda, whose businesses range from real estate to football and cinemas, has embarked on a string of asset sales.

“Wanda has some cash offshore which is not enough to repay by the March deadline. But after the London and potentially other overseas asset sales, it should be able to alleviate its debt repayment pressure,” said S&P Global Ratings associate director Dennis Lee.

Wanda Commercial Properties Co Ltd, which directly and indirectly holds stakes in overseas real estate assets, needs to make a $510 million payment on a syndicated loan by the end of March.

It has another $1 billion to repay by end-May and has $600 million in offshore notes due in November, ratings agencies have flagged. Fitch Ratings estimates that Wanda Commercial had total debt of around $34 billion as of the end of September.

“My next question is how will Wanda prepare the (next) refinancing,” Lee added. S&P downgraded Wanda Commercial’s rating to junk last year.

SELLING AT COST

The two Australian high-end residential and hotel projects under development - the One Circular Quay in Sydney and the Jewel Resort on the Gold Coast - will be sold at around cost, one of the people said.

The sources declined to be identified as they were not authorized to speak about the deal.

    The Australian newspaper reported that property developer Yuhu, which is backed by Chinese investors, had entered into exclusive talks with Wanda to buy the assets.

    Shares in Wanda Hotel Development Co Ltd (0169.HK), which owns the projects, were put on a trading halt on Friday, pending a statement regarding a “very substantial disposal” by the company. It gave no further details.

    An official at the Dalian Wanda Group declined to comment. A spokesman for Yuhu said in a text message that the company had no knowledge of any such transaction.

    A sale of the Australian projects would come on the heels of Wanda’s announcement this week that it had agreed to sell its interests in the London luxury development project, One Nine Elms, for 59 million pounds ($81 million).

    Last year, Wanda sold a portfolio of domestic hotels and tourism assets, including 13 theme parks, for $9 billion to Guangzhou R&F Properties (2777.HK) and Sunac China (1918.HK).

    Wanda is also considering a Hong Kong listing for its sports assets as part of efforts to rationalize its portfolio, according to people familiar with the situation. Other flagship overseas developments in Chicago and Los Angeles are also available for sale, according to one source.

    Responding to a local online media report that questioned the group’s financial health, Wanda last month said its 2017 revenues had surpassed 200 billion yuan and it had 200 billion yuan in cash.

    ($1 = 1.2477 Australian dollars)

    ($1 = 6.3930 Chinese yuan)

    Reporting by Clare Jim; Additional reporting by Tom Westbrook in Sydney, Donny Kwok in Hong Kong and Matthew Miller in Beijing; Editing by Edwina Gibbs

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