By LI Shen, NIU Yu

It seemed only yesterday that the name Wanda represented vigorous business atmospheres and cool urban vibes. Wanda Group’s slogan was “the center of a city is where a Wanda Plaza stands.” Even the company’s name “Wanda” is a slogan aspiring to be able to reach everything.

Now all that is distant memories. When the subsidiary Zhuhai Wanda Commercial Management Group failed to pass its IPO assessment three times in a row, the whole group, China’s first shareholding company after economic reform, painted itself into a corner.

Ticking like a bass drum

According to Wanda’s valuation-adjustment mechanism (VAM) - a common clause in many Chinese private equity merger and acquisition deals – the entertainment and retail mammoth will have to repurchase shares and repay loans of 30 billion yuan (US$4.2 billion) if Zhuhai Wanda does not go public by December. The clock is ticking like a bass drum.

Fast backward to January 2018, when the teary-eyed founder of Wanda WANG?Jianlin reflected on 30 years of success and the enormous amounts of money he had made. Then, a year before, the company was forced to short-sell a bunch of assets, including hotels and properties in London and Sydney, after its shares and bonds collapsed.

It looks like the sell-off might be the new business mode for Wanda. The entertainment on offer by the cinema chain seems to be dumping yesterday’s unwanted assets - dingey old malls that must have looked totally modern in the 1990s and now look like, exactly what they are, nothing much. Wanda is no longer at the center of anything.

Rumors have been circulating for a while that Wanda plans to sell over 20 shopping malls in Zhejiang, Jiangsu and Shanghai, some of the most prosperous parts of the country. Each mall is said to be worth around 800 million yuan, but that is very much a seller’s price.

Everyone but the loyal few

Tight-lipped Wanda Group has admitted it is “optimizing” personnel. Heads are rolling in management and real-estate subsidiaries.

XIAO Guangrui, president of Zhuhai Wanda and the man responsible for the next attempt at an IPO, has a WeChat account called “Wishing everyone well,” where he sometimes shares his personal thoughts. The comments section – now hidden from the public – was completely bombed out by bitter ex-Wanda employees: “You wish everyone well, everyone but loyal Wandaers”.

Fighting for survival

Just a couple of months ago, Wanda was planning a comeback after three years of Covid. In Q1, catering and hospitality grew 13 percent year on year.

Last year, Wang Jianlin, now seldom captured by public lights, traveled across China to sign up projects, and at the 2022 annual conference, he said Wanda had two tasks for 2023 – the Zhuhai Wanda IPO and a restart of the tourism business.

Wang himself,?remains?the richest property developer on the Chinese mainland. Property management earned 12.5 billion yuan of rent last year; Wanda opened 55 new plazas. But Wanda is struggling.

The fact is that the real estate market is very far from fully recovered. In the first four months of this year, investment in property was down 6.2 percent. Property developers have had their shares suspended due to debt issues; many have been delisted. R&F Properties and Sunac which bought some of Wanda’s assets back in 2017, are now fighting for survival.?

WANG Yongping of the China Real Estate Chamber of Commerce said commercial the real-estate business will need at least another 18 months to catch its breath.

“Things may seem to be recovering with all numbers growing,” said Wang, “but that is not a real comeback of the vibe, and for some smaller cities, it may take even longer to have their businesses restored.”

Wanda Plazas are mostly in smaller cities. The business has not turned up yet in small cities.

Hair of the dog

Funding is not going well either. Wanda applied to issue a 6-billion-yuan corporate bond earlier this year, but the securities regulatory commission asked some tricky questions, which Wanda has not yet taken the time to answer, so the bond plan is becalmed in some murky waters.

Wanda steadfastly refuses to give up on the IPO of Zhuhai Wanda, but the prospectus expired again on April 25, and the company has not updated it.

The company is negotiating with banks for additional loans and hopefully further time, but it seems unlikely that more of the same – bigger debts – will help.

This ain't a fairy tale

In 2017, selling off hotels and overseas developments brought Wanda more than 100 billion yuan and some breathing space.

Covid has since sucked all the air out of the market and the reliable old buyers are all bogged down in their own muddy puddles.

There is little hope of a white knight riding over the horizon to save Wanda any time now. This is the cinema business, not actually cinema.