You are here
China to punish Wanda for breaching investment rules
[BEIJING] China plans to punish billionaire Wang Jianlin's Dalian Wanda Group Co for breaching the nation's restrictions on overseas investments by cutting off funding and denying the conglomerate with necessary regulatory approvals, according to people familiar with the matter.
The government has found six investments that breached China's restrictions, four of which have been completed and two are still pending, according to the people, who asked not to be identified because the matter is private. The deals being scrutinized include a Wanda unit's purchase of Nordic Cinema Group Holding AB and Carmike Cinemas Inc, said the people.
A Wanda representative declined to comment. China's banking regulator didn't immediately respond to requests for comment.
The move represents an unprecedented setback for China's second-richest man, who was among the country's most prominent dealmakers up until last year by gobbling up Hollywood assets such as "Kong: Skull Island" producer Legendary Entertainment. For the government, targeting one of the country's top businessmen represents an escalation of its broader efforts to crack down on capital outflows.
According to the people, the four completed deals will be subject to punitive measures including: No financing from domestic banks.Assets will be barred from being injected into any listed entity in China. Wanda will be barred from injecting capital into those assets from within China or involve them in any restructuring with any of Wanda's domestic units. No government approval will be given if Wanda attempts to sell those assets to any Chinese companies. On the two pending deals, related authorities won't provide support with financing or foreign-exchange-related approvals needed to move money out of China, according to the people.