Chinese financial regulators have ordered the country's biggest banks to stop making loans to billionaire Wang Jianlin's Dalian Wanda to finance foreign entertainment acquisitions, according to a document seen by The Wall Street Journal.
China's banking regulators met with executives of the country's big state-owned banks on June 20 and advised them that Dalian Wanda's foreign acquisitions were subject to the capital restrictions imposed by the government a year ago, the journal reported, citing a document from one on the participating banks. The deals being scrutinized include a Wanda unit's purchase of Nordic Cinema Group Holding AB and Carmike Cinemas Inc., said the people.
Chinese regulators have suddenly decided to take issue with Wanda’s 2012 purchase of American cinema chain AMC
Four of these deals have already closed but the two that haven't - Odeon and Nordic Cinema Group - are being acquired via Wanda's AMC unit in the USA, which trades on the New York Stock Exchange and therefore doesn't appear to fall under China's regulatory jurisdiction. But a source tells the Journal that the new regulatory actions can be expected to prevent Wanda from generating new financing in China for the four past transactions, as well as the two that are pending. Whether Wanda will proceed with the pending deals for the two European cinema operators given the government's apparent discouragement also becomes an open question. In an effort to stem capital flight, which was seen as contributing to a devaluation of China's battered currency, the government upped scrutiny of large transactions and instituted various measures to make it more hard for acquirers to shift capital overseas.