Wanda Commercial mulls repaying its three yuan bonds early

Dalian Wanda Commercial Management Group is considering repaying its three outstanding onshore bonds ahead of their due dates in a bid to save interest expenses, people familiar with the matter said.

It’s unclear if the key unit of Wanda Group, among the few major Chinese real estate companies to avoid public defaults during an unprecedented property crisis, would opt to actually take that step, according to the people. If any early repayments on principal of the three bonds were to move forward, Wanda Commercial would not make interest payments falling due after that for those securities, the people said.

Underwriter representatives gauged interest from a holder of one of the securities in a private conversation in recent days, one of the people said.

When asked whether it is considering such steps and if it had gauged interest from noteholders, Wanda said in a reply to Bloomberg News, “The information is untrue, and Wanda doesn’t have plans to proactively repay domestic bonds ahead of maturity.”

The Wanda Group has been fending off stress amid China’s economic slowdown and property market crisis, as it shifts to an “asset-light” business model. Wanda was forced in recent years to shed assets that once brought it clout, including a stake in Spanish soccer club Atletico Madrid and the cinema chain AMC Entertainment Holdings Inc. More recently, an entity affiliated with the group took steps to sell a yachtmaker whose boats were featured in James Bond movies.

The outstanding amount of the three notes totals 2.27 billion yuan (HK$2.43 billion), according to data compiled by Bloomberg. All carry put options, which holders can exercise by certain dates to demand early repayment. Some investors have already exercised these options on two of the bonds and received payments. Both securities mature later this year, and if Wanda Commercial were to seek earlier repayment, it may need to hold creditor meetings to vote on such steps, according to the people.

The put option for the other security falls on March 22. That bond, issued in the amount of 1.5 billion yuan, still has that much outstanding and matures next year. Wanda Commercial told offshore creditors in November meetings that it planned to use part of the cash it received from selling its holding in Dalian Newland Commercial Management to a PAG-led group to repay the security.

The firm also said at the same meetings that it expected the remaining cash received from the PAG-led Group would be around 2.6 billion yuan by the end of 2024, with usage restricted to debt repayment, according to two other people at the time. The firm said most of the cash would be used to repay onshore bonds, the people added.

More recently, Wanda mentioned that it has money parked in its bank account earning lower interest than that owed to bondholders, according to the people familiar with the recent discussions.

While its core business is commercial property management, rather than residential development, Wanda has previously flagged challenges.

The country’s property downturn and economic slowdown in China has adversely affected the group, “in particular its cash flows,” it said in a November filing. A unit of Wanda Commercial last year extended a dollar bond initially due in 2025 to 2026.
Bloomberg