Shares in AMC Entertainment, the large U.S. movie theater chain, plunged by 10% on Monday on reports that China plans to squeeze funding available its main shareholder, the Wanda Group controlled by billionaire Wang Jianlin, in response to violations of rules on overseas investments.
Six violations in overseas investments have been identified, including two pending deals that involve AMC Entertainment, media said. Wanda, one of China’s largest property developers, in recent years expanded overseas in the global entertainment and film industry at a time when the government had been encouraging Chinese companies to go global and help build up the country’s “soft power.”
Authorities will bar Wanda from getting financing for the overseas projects, using money parked in China for them, and injecting the assets into domestic companies, the Wall Street Journal said. Wanda didn’t respond to a request for comment yesterday.
It isn't clear from the reports how Wanda would have been able to circumvent Chinese rules on large overseas projects. The reported moves against Wanda come amid a big government tightening of restrictions on overseas investment starting last November, following downward pressure on the country’s currency and slowing economic growth at home.
Wanda acquired AMC in 2012, took it public in New York in 2013 and, through acquisitions, has since turned the company into the largest U.S. theater chain.
In a move to improve its cash resources, Wanda Group said last week it would sell 76 hotels and control of 13 tourism properties to Sunac China for a total of $9.3 billion. That sale following reports that China’s government was looking into debt levels at Wanda, HNA Group and Fosun Group in connection with active overseas efforts by the three in recent years.
Wang was recently surpassed as China’s richest man by Alibaba Group Chairman Jack Ma.
--Follow me on Twitter @rflannerychina
