By YANG Bingke
PAG (Pacific Alliance Group), an investment group, and Dalian Wanda Commercial Management Group on Tuesday reached an agreement on debt structuring.
PAG, along with other investors, will reinvest in Zhuhai Wanda Commercial Management after Dalian Wanda Commercial Management redeems its investment at the end of the year.
Shackles are off
Investors put approximately 38 billion yuan (US.3 billion) into Zhuhai Wanda in August 2021, with PAG's share amounting to US.8 billion (20 billion yuan). The biggest difference between the new agreement and the old one is that the new agreement no longer includes a performance-based agreement concerning Zhuhai Wanda's listing.
Before the agreement, the biggest challenge facing Wanda founder WANG Jianlin was the possibility that if Zhuhai Wanda failed to go public by the end of 2023, Dalian Wanda would need to find 30 billion yuan for stock repurchases.
Under the new agreement, Dalian Wanda’s equity in Zhuhai Wanda is reduced to 40 percent. PAG and other investors will hold a combined stake of 60 percent. Previously, Dalian Wanda's stake in Zhuhai Wanda exceeded 78 percent.
Pushed to the limit
Two weeks ago, Wanda began formal discussions with investors about delaying the listing. At that time, Wanda proposed spreading the 30-billion yuan stock repurchases and interest over four years. Wanda would provide an additional 20 percent of Zhuhai Wanda as a sweetener.
But it was not sweet enough for investors. With only days left before the payment deadline, Wanda had to come up with a more palatable offer. The 38 percent that will now change hands helps for now. The can is kicked down the road.
Tale of the tape
Wanda must now work with major shareholders, including PAG, to maintain the credibility of the management team and support long-term survival.
Over the past two years, the number of commercial centers managed by Zhuhai Wanda has increased from 417 to 494. Zhuhai Wanda is now the world's largest commercial management company. After-tax revenue is estimated to be around 30 billion yuan in 2023, up about 12 percent.
Profit has also grown over the past three years. After-tax profit was 5.3 billion yuan in 2021has and is estimated to be 9.5 billion yuan in 2023. Over the past three years, the company has contributed approximately 10 billion yuan in taxes.
