(Yicai Global) Dec. 5 -- The share price of Wanda Hotel Development Co. [HKG:0169], a subsidiary of Wang Jianlin’s Dalian Wanda Group Co., has surged more than 30 percent over the last week. The jump in share price came after the Group announced it will buy equity in Wanda Hotel Development via Wanda Commercial Properties Overseas in a USD469 million deal. Investors speculate that Wang is planning a big move, the Shanghai Morning Post reported.
Yesterday, Wanda Hotel Development announced a proposed restructuring at the Hong Kong Stock Exchange. Its parent Wanda Commercial Properties Overseas will sell the controlling stake of the company to Wang's new wholly-owned subsidiary. With completion of this deal, Wang will further strengthen the control of its overseas listing platform. Wanda Hotel Development may play a more important role in Wanda’s financing activities in the future. Driven by the news, Wanda Hotel Development share price rose 19 percent in the trading session yesterday, up 10.5 percent at the close.
In the previous company structure, Wang held 53.68 percent of the Dalian Wanda Commercial Properties Co., which indirectly held 65.04 percent stake in Wanda Hotel Development via Wanda Commercial Properties Overseas. Based on this calculation, Wang indirectly holds 34.91 percent stake in Wanda Hotel Development.
Through this transfer, the shareholding of Wanda Commercial Property Overseas will be directly transferred to Wang’s new wholly-owned subsidiary. This means that Wang will eventually hold 65.04 percent stake in Wanda Hotel Development, consolidating his control over the company.
Wanda Hotel Development is currently the only overseas listing platform of Wanda. Previously, the platform was mainly used for mergers and acquisitions of overseas projects. In August, Wanda injected its two large asset-light subsidiaries, Wanda Hotel Management and Wanda Cultural Industry Group into its Hong Kong listed subsidiary Wanda Hotel Development, for CNY750 million (USD113 million) and CNY6.3 billion. Wanda Hotel Development sold part of its stakes of the company's four units to Wanda Commercial Properties.
Wanda Hotel Development's function as the asset light operation platform is more clearly defined. With the arrival of 2018, Wanda's privatization agreement is about to expire, and Wang may be preparing for it, the report suggests. On the one hand, Wanda is making efforts to achieve listing in the A-share market through asset-light platform. On the other hand, if the listing fails, it must make fund arrangement for the buyback.
Wanda signed an agreement for privatization of its listed unit, which indicates that Wanda Commercial Properties plans to complete listing in mainland markets before August 31, 2018.
If the company fails to be listed on the mainland's main board either two years after the delisting or before August 31, 2018, Wanda Group will buy back all the shares and pay 12 percent and 10 percent interest to overseas and domestic investors respectively. Based on this calculation, it is less than nine months from the date that Wanda agreed to list in the A-share market. The latest IPO application information issued by the China Securities Regulatory Commission (CSRC), the country's top securities regulator, shows that Dalian Wanda Commercial Properties is currently lining up at 43 for IPO approval.
"Theoretically, Wanda’s listing in the A-share market still has a chance. But the key is to improve its profitability and reduce the debt. Wanda's capital operation is aimed at achieving that," industry insiders commented.