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Update: Wanda makes A$1.13B deal to exit 2 developments in Australia official

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Update: Wanda makes A$1.13B deal to exit 2 developments in Australia official

Wanda Hotel Development Co. Ltd.'s 60%-owned subsidiary, Wanda Australia Real Estate Investment Co., agreed to sell its rights in a Sydney project and its complete 55% interest in a Gold Coast project in Australia to AWH Investment Group Pty. Ltd. in a roughly A$1.13 billion deal.

Following up on a recent announcement, the company said the price tag comprises roughly A$315.0 million in cash and approximately A$815.1 million of debt that AWH agreed to repay for Wanda Hotel. The trade will be executed through the sale of all 202,783,619 shares in the projects' holding company, Wanda Australia Commercial Properties Pty. Ltd.

The Gold Coast development, which sits on 38-44 Old Burleigh Road in Queensland, is composed of three high-rise towers to be built on a planned total gross floor area of approximately 146,200 square meters. The towers will house a five-star hotel and two luxury apartment buildings, of which roughly 40% of saleable area is pre-sold as at the end of December 2017. The project is slated for completion in 2019.

Meanwhile, a 194-meter-high tower will be built on approximately 97,500 square meters of planned total gross floor area and feature hotel, residential and retail areas along One Alfred St. in Sydney's central business district. The development's completion is expected in 2021.

The disposal is expected to result in a gain of approximately HK$556 million. Of the roughly HK$4.13 billion net proceeds attributable to the group, about HK$4.06 billion will be used to repay loans and interest to Wanda Commercial Properties (Hong Kong) Co. Ltd. Roughly HK$27 million will be used to settle transaction costs related to the projects, while nearly HK$43 million will be available to the group for general corporate working capital purposes.

The company will repay the debt in installments starting from the completion date and until Nov. 9. Execution of the contract is subject to certain conditions, including the approval of shareholders, which will be sought at a proposed special general meeting. Controlling shareholder Wanda Commercial Properties Overseas Ltd. has agreed to irrevocably undertake to vote in favor of the deal.

Following expected closing of the sale March 15, Wanda Australia Commercial will cease to be a subsidiary of Wanda Hotel. In the event that completion does not occur on the said date, the parties will determine arrangements with respect to accrued interest on the debt's relevant portion, as well as a provision of funds to support the projects' daily operations before March 20.

Wanda Hotel's shares are expected to resume trading from 9 a.m., local time, Jan. 30, after the halt that was implemented Jan. 19 ahead of the disposal announcement.

The divestment of the properties is believed to have been influenced by Wanda Hotel's parent, Dalian Wanda Group Co. Ltd., feeling the heat from the Chinese government's efforts to clamp down on offshore investments. In its release, the hotel arm of the Chinese conglomerate said the company is open to selling its project in the U.S. but has no plans to terminate, downsize or dispose of its existing businesses at home.

Reuters noted Jan. 29 that AWH is an associate of Yuhu Group, a company that was attached with the sale early on. In a same-day The Australian Financial Review report, Yuhu Founder and Chairman Huang Xiangmo confirmed the sale, adding that the owner of the remaining 45% interest in the Gold Coast project, Ridong Group Ltd., has also sold its interests to Yuhu.