Wanda Hotel Development Co. Ltd, a subsidiary of retail-to-entertainment conglomerate Dalian Wanda Group, has sold a Chicago property to a local partner, according to a company's statement.
The group, which needs to pay off about $5.7 billion in bonds this year, has sold all its overseas real estate projects as a result of a cash crunch that was worsened by COVID-19.
A Landmark, Lost
Wanda Hotel said its partly owned subsidiary Wanda Chicago Real Estate sold 90% of its shares in the Vista Tower hotel-and-residential development for $270 million. The buyer is Illinois-based Magellan Parcel - which owned a 10% before the deal.
At a Wanda Hotel shareholders' meeting Oct. 16 more than 98% voted to sell the Chicago property. Wanda Hotel will use proceeds to repay $281 million in debt.
When Wanda spent $900 million in the project in 2014 it expected Vista Tower to be a landmark.
The 1,191-foot-high Vista Tower is a 101-story structure that includes 393 luxury condos. It has been under construction since August 2016 and will be the third-tallest building in Chicago.
"As the Chicago property project is still under construction, the disposal will help reduce the current and future indebtedness of the group," Wanda Group said in a statement. "And it will benefit the group by strengthening the financial position."
Faded Dreams Of Empire
When the founder of Dalian Wanda Group Wang Jianlin was China's most wealthy business owner in 2012 he said his dream was not just to make the company bigger but "extend the hotel brand to overseas markets."
The conglomerate borrowed billions to fund its empire acquisition.
Beginning with the 2012 purchase of AMC Entertainment for $2.6 billion, Wanda Group launched a wave of foreign acquisitions of real estate including hotels, offices and residential projects in the U.S., the UK, France, Spain and Australia as well as Europe football clubs and a yacht builder.
Wanda had to halt its ambitions when, in 2017, the China government started to curb capital flight. It cracked down on debt-fueled, cross-border investment to squelch outbound cash.
Real estate, hotels, theaters, sports clubs and other entertainment businesses were the sectors that faced strict impositions.
Wanda had to sell a Beverly Hills mixed-use site for $420 million. It disposed of the OneNight Elm site in London at a 30 billion British pound loss in early 2018 and followed by selling two hotel projects in Australia. In March Wanda unloaded the Ironman triathlon event for $730 million after that company's stock price fell by half.
In March 2018, Wanda said Vista Tower was its only remaining overseas real estate project. Wanda reportedly sold 130 billion yuan ($18.3 billion) in assets through 2019. It had scooped up $35 billion in overseas assets between 2012 and 2017.
AMC, The Final Frontier
AMC Entertainment reported losses of $905.8 million in the third quarter - even with most of its theaters reopened. It saw $54.8 million in losses during the same period a year ago. The company's revenue was $119.5 million - a drop of 91% year on year.
In October AMC warned U.S. financial regulators and its market participants that it might soon run out of cash.
"Given the reduced movie slate for the fourth quarter, in the absence of significant increases in attendance from current levels or incremental sources of liquidity, at the existing cash burn rate the company anticipates that existing cash resources would be largely depleted by the end of 2020 or early 2021," AMC said in a filing to the U.S. Securities and Exchange Commission.
As of the end of June, AMC had $498 million in cash or cash equivalents on hand against current liabilities of $1.71 billion. The U.S. cinema chain sought a restructuring to help beat back a near-term bankruptcy filing.
Silver Lake Group, which owns $600 million of convertible bonds in AMC and has a representative on the board, agreed in July to purchase $100 million in first lien notes which AMC made available to help it through the coronavirus crisis.