Reporter, Li Huilin, Editor, Tan Lu
Wang Jianlin’s good days were just a few days away, and he had reached a critical juncture again.
Recently, it has been reported that Wanda Group is discussing with major domestic banks the renewal plan of domestic loans to extend the repayment time of the principal of domestic loans.
This move could be seen as a restructuring of its domestic debt.
The IPO of Zhuhai Wanda Commercial Management has been postponed again, and Wang Jianlin’s move has been interpreted as saying that Wanda Group’s funds have been stretched thin.
The market has long been moved by the wind.
Since April, Wanda’s bonds have fallen across the board, and the two US dollar bonds issued at the beginning of the year have hit a record low since their issuance.
In the past two years, the real estate industry has been in a huge shock. Wang Jianlin, who has shed heavy assets and embarked on the road of light assets, has been fortunate to avoid this round of crisis, and even played the role of "white warrior" to rescue his peers.
However, the listing financing has been fruitless, and Wang Jianlin has been involved in the debt crisis again.
Debt hits
For the IPO of Zhuhai Wanda Commercial Management, Wang Jianlin was originally full of confidence.
Previously, it was agreed with overseas banks to complete the listing before May 8 this year, otherwise Wanda Group would have to repay three offshore loans of $1.30 billion in advance.
At the beginning of this year, the management of Wanda Commercial Management vowed that it would go public in the second quarter. Unexpectedly, there is still no timetable. Since the initial IPO application in 2021, Wanda Commercial Management has submitted its forms three times.
The road to listing was more bumpy than Wang Jianlin had expected.
At an internal meeting half a month ago, he admitted that Wanda Group had encountered periodic difficulties due to the delay in commercial listing.
The difficulties center on the debt pressure, starting with the looming maturity of the two betting agreements.
The aforementioned three offshore loans of $1.30 billion have triggered repayment treaties.
After negotiation, one-third of the participating lenders agreed to waive this clause, and the agreed listing date was postponed to November 30, 2023, pushing the pressure to six months later.
The greater pressure lies with institutional investors.
In 2021, Zhuhai Wanda Commercial Management completed a pre-IPO round of financing of 38 billion yuan, including Zhuhai SASAC, Zheng Yutong family, Country Garden, CITIC Capital, Ant and other consortiums.
If the IPO cannot be completed by the end of 2023, the strategic investor has the right to exercise the right to sell back and request its parent company, Dalian Wanda Commercial Management, to repurchase capital.
The latest bond report shows that by the end of 2022, Dalian Wanda’s short-term borrowings increased by 9 times to 5.046 billion yuan, and non-current liabilities due within one year rose sharply to 68.768 billion yuan, an increase of 3 times year-on-year.
There was a huge amount of potential repurchase money before, and then there was a peak in debt repayment.
According to the data of the Enterprise Early Warning Platform, only Dalian Wanda Commercial Management is the main body, with a total of 6 bonds maturing within one year, the balance is 4.923 billion yuan, and there is a 400 million dollar bond overseas, which will mature in July.
Raise money everywhere
The repayment date is approaching, and Wang Jianlin said that Wanda will not go bankrupt.
He went to various places to discuss cooperation and increase the chips of Zhuhai Wanda Commercial Management’s listing; while "looking for money" everywhere to fill the debt hole.
Since the beginning of this year, Wang Jianlin has a busy itinerary. From mid-February to mid-March, he traveled to Jilin, Henan, Guizhou and Liaoning provinces within a month to negotiate cultural tourism projects.
(Source: Visual China)
During his business trip, Wang Jianlin met with senior management of banking institutions on several occasions.
In February, he signed cooperation agreements with Harbin Bank and Zhongyuan Bank, and in mid-March he met with the acting chairperson of Shengjing Bank.
Previously, Wang Jianlin has started to prepare domestic and foreign debt financing. In January-February, Dalian Wanda Commercial Management issued two overseas bonds totaling 700 million US dollars; in March, it announced that it plans to issue 2 billion yuan of interbank bonds.
Overall, Dalian Wanda Commercial Management’s external financing capacity is weakening. In the past two years, its financing cash flow has been in a net outflow state, with a net outflow of 30.036 billion yuan in 2022 alone.
The two foreign bonds issued at the beginning of this year have a coupon rate of up to 11%, indicating that financing has become more difficult.
Two months ago, Dalian Wanda Commercial Management also submitted to the Shanghai Stock Exchange to register a 6 billion-sized corporate bond, which was questioned by the China Securities Regulatory Commission and asked to explain the reasons for the continued large-scale negative cash flow of financing activities and evaluate the impact on the bond repayment.
At present, Wanda Commercial Management has not replied yet.
Due to the difficulty of financing, Wang Jianlin turned to pledging and reducing his holdings in listed companies to obtain loans and cash.
In January, Wang Jianlin pledged his 65.04% stake in Wanda Hotels to Temasek Holdings for a loan.
In March, Wang Jianlin has two times to reduce Wanda Film shares, to reduce the closing price of the day, a total of about 1.50 billion yuan.
On April 25, China Resources called it a "rumour" after market news that Wanda’s property division would be acquired by China Resources Land.
Due to concerns about Wanda’s commercial liquidity, in May, Moody’s downgraded the family rating of Wanda Commercial Management Company to "Ba2" and placed it on the downgrade watch list.
This means that Wang Jianlin’s subsequent overseas financing will become more difficult.
False prosperity?
Despite being mired in debt distress, Wang Jianlin’s business portfolio has not been subject to major fluctuations, and Dalian Wanda Commercial Management, as a core asset, has maintained stable performance.
The bond report shows that Dalian Wanda’s commercial management revenue in 2022 was 49.188 billion yuan, an increase of 4.86% year-on-year, mainly due to the growth of the scale of the mall.
By the end of last year, its Wanda Plaza had opened 55 new buildings, with a total of 473 projects and a commercial area of 65.56 million square meters under management.
The revenue pillar of Dalian Wanda Commercial Management, mainly investment property leasing and management, is about 45.10 billion yuan in 2022, contributing 90% of total revenue.
Zhuhai Wanda Commercial Management is an asset-light part spun off from Dalian Wanda Commercial Management. It is also the main listing body that Wang Jianlin is promoting. It is mainly responsible for the operation of Wanda Plaza, earning rental income and merchant operating income. Its cash flow is more stable than development.
As of the end of 2022, Zhuhai Wanda’s total assets 22.886 billion yuan, accounting for a small volume, but accounting for half of the income.
In 2022, its business operations revenue and profit were 27.12 billion yuan and 12.984 billion yuan respectively.
Under the asset-light strategy, the number of Wanda shopping malls is still increasing. As of the end of last year, there were 187 Wanda plazas under construction, with a commercial area of 21.95 million square meters.
Wanda Plaza’s ability to attract investment was once a source of confidence for Wang Jianlin to go public. By the end of 2022, the rental rate of its shops was 98.7%, and the rent collection rate was 100%.
However, whether these dazzling data are false prosperity requires a question mark.
In March, a Wanda employee pointed out that the authenticity of Wanda Commercial Management’s merchant performance, rental rate, passenger flow and other data is questionable. It is said that Wanda implements strict assessment indicators, requiring tenants to seize and attract investment rates to achieve 100%. In the period when the physical business is hit by the epidemic, this is an almost impossible task, and front-line employees can only "fake".
"Although the merchants don’t owe Wanda Group, they owe a lot to the general manager and deputy general manager of the project."
A Wanda employee told 21CBR that in order to meet the rent collection rate targets, some managers sometimes advance the rent for merchants, and then let the merchants pay it back slowly.
An industry insider also pointed out to reporters that it is almost impossible for every shopping mall to achieve a 100% investment rate, especially in some non-central urban business districts, where investment is much more difficult than before.
The reporter’s on-site visit also saw that the rental situation of some Wanda plazas is not ideal, such as Guangzhou Baiyun, Panyu Wanda plaza, many indoor shops are vacant, weekend lunch time, in addition to the dining area, the traffic counting in the mall is not large.
For the authenticity of the financial data, Wanda has not yet replied.
IPG China Chief Economist Bai Wenxi pointed out that companies that usually plan to list in Hong Kong stocks need only 3-6 months from obtaining the acceptance letter from the Securities Supervision Commission to obtaining the approval approval. Previously, there has been no listing cycle for more than half a year due to approval reasons. Zhuhai Wanda Commercial Management has set a record for the slowest overseas listing of private enterprises.
He believes that the possibility of Wanda Commercial Management rushing back to class A shares listing in the future is not ruled out.
It is said that Zhuhai Wanda Commercial Management is still advancing the IPO matter. In accordance with the new regulations of the Securities Supervision Commission, the documents will be updated again in the future. According to the gambling agreement, Wang Jianlin has less than seven months.