China’s commercial giant, Wanda Group, is currently facing its most severe debt crisis in history. Recently, the company had 9.4 billion yuan worth of equity frozen by the court, marking the highest amount of equity frozen in a single transaction. This event further underscores Wanda Group’s increasingly dire cash flow problems as the accumulation of 38 frozen equity pieces points to a full-blown debt issue.
Wanda Group Co., Ltd. has recently been subjected to large-scale judicial restriction, with over 9.4 billion yuan in equity frozen, signaling a new stage in the company’s debt crisis.
According to the Tianyancha APP information, the frozen equity involved Shanghai Wanda Network Financial Services Co., Ltd. and Shanghai Wanda Small Loan Co., with a total amount of up to 9.4 billion yuan, frozen for a period of three years and executed by the Beijing Financial Court.
Previously, a subsidiary of Wanda, Dalian Wanda Commercial Management Group Co., Ltd., had 1.979 billion yuan in equity frozen, also executed by the Beijing Financial Court.
As of September 5th, Wanda Group has had 10 cases of execution totaling 4.929 billion yuan, along with 25 cases of historical executions totaling 9.125 billion yuan.
Furthermore, there are 38 pieces of information on frozen equities and 29 cases filed, involving core subsidiaries such as Dalian Wanda Group Business Services Co., Ltd., and Beijing Wanda Cultural Industry Group Co., Ltd.
Of particular note, the 100% equity of Beijing Wanda Cultural Industry Group (valued at 8 billion yuan) has been frozen by the Henan Province Zhengzhou Intermediate Court until March 17, 2028. Analysts in the industry believe that the fundamental reason behind this massive wave of equity freezing lies in their severe debt default issues, with each freeze related to unresolved debts.
An important factor contributing to Wanda Group’s current dilemma is a breach of the “betting agreement.” Zhuhai Wanda Commercial Management signed a betting agreement with investors during Pre-IPO financing, stipulating that if the company failed to go public by the end of 2023, they would have to repurchase the investors’ equity worth around 38 billion yuan at an 8% annual interest rate.
Due to the failure to realize the IPO plan, investors initiated a recovery process, leading to a series of equity freezes for Wanda Group from 2023 to 2024.
From a financial perspective, Wanda Group’s cash flow situation is extremely severe. As of September 2024, Dalian Wanda Commercial Management’s short-term debt due within a year exceeded 43.9 billion yuan, while their monetary funds stood at only 15.1 billion yuan, leaving a funding gap of 28.8 billion yuan.
Under immense financial pressure, Wanda Group has had to rely on “borrowing new to repay old” to sustain operations, and once external financing gets blocked, they get caught in a vicious cycle of frozen equities and assets. Despite attempts in recent years to sell core assets such as Wanda Plazas to raise funds, the actual results have not been promising.
Faced with an unprecedented debt crisis, Wang Jianlin, the Chairman of Wanda Group, is adopting a more proactive strategy of asset sales. A significant transaction involving 100% equity of 48 target companies has entered its substantive operation phase.
According to Tianyancha, on August 25th, a private equity fund “Wide Encounters Private Equity” was officially established, comprised of 13 enterprises including Taimei, Gaohe Fengde, Tencent, Beijing Panda Commercial Management Co., Ltd., and Yangguang Life Insurance, with a total capital of 22.429 billion yuan, aimed at acquiring all the equity of the 48 target companies under Dalian Wanda Commercial Management. This move is designed to provide Wanda Group with hundreds of billions of yuan in cash at once to repay domestic and foreign debts.
While large-scale asset sales can temporarily alleviate financial pressure, the fundamental issue of Wanda Group’s difficulty in capital market financing remains unresolved. The Group has been transitioning towards a light asset operation model in recent years, but regaining investor confidence and restoring normal financing capabilities pose significant challenges.