China’s Dalian Wanda Group has amended its terms for the proposed sale of its theme parks and 77 hotels. The changes include lowering the total price of the deal to $9.22 billion and changing the buyer of the hotels, Variety reported.
Wanda told Variety the new buyer of the hotels will be Guangzhou’s R&F Properties instead of developer Sunac China—the original buyer of Wanda’s parks and hotels. The group will no longer arrange vendor financing to assist Sunac in its portion of the purchase. The parks now cost $6.34 billion instead of $4.29 billion while the 91-percent stake in the hotels now costs $2.88 billion.
Wanda’s $9.3-billion sale of its hotels and theme parks to Sunac was intended to lessen its debt burden. The sale sparked interest in Wanda’s financial position, which increased a day later when Sunac stated Wanda would help the developer obtain loans worth about half the total sale price. This move created doubt the company would be able to reduce its debt. The joint statement from the three companies stated Sunac has already paid a first installment of $2.17 billion.
According to Chinese government documents, authorities ordered banks to cease lending to Wanda related to six of its overseas properties. The consequences for Wanda’s lending ban are still unclear, but the symbolic cost may be high. The conglomerate, which has traded on its political connections, is currently in an unstable position. Now, the value of Wanda’s market-traded debt has altered drastically and affected the share price of its subsidiaries currently trading. Ahead of the subsidiary’s announcement of its restructuring and refinancing plans, Wanda Film Holdings has been suspended from trading.
There is also growing doubt of Sunac’s finances. The developer’s commercial debt was downgraded by ratings agencies. Not only has Sunac been highly acquisitive in the past two years, the company has also invested in China-based technology and entertainment conglomerate LeEco, which is currently battling its own legal and debt issues.