Dalian Wanda vows legal battle as Chinese court freezes US$270 million worth of shares amid stalled Hong Kong IPO
- The group is ‘appealing through legal channels and is confident in defending its legitimate rights and interests’, it said on Thursday
- The group faces liquidity concerns following failures by its its property-management unit to get approval for a Hong Kong IPO
Dalian Wanda Group, China’s largest commercial property developer, said Thursday it is fighting a legal battle over the freezing of 1.9 billion yuan (US$270 million) worth of shares it owns in a subsidiary amid a bumpy path to an initial public offering (IPO) in Hong Kong.
On Monday, a Shanghai court ordered 1.98 billion yuan worth of shares in the group’s property-management arm Dalian Wanda Commercial Management Group frozen until June 4, 2026. The court did not provide reasons.
The group is “appealing through legal channels and is confident in defending its legitimate rights and interests”, it said in a brief statement on Thursday.
“Wanda Real Estate Group and a company have cooperated in a large project, and there is still a financial dispute of more than 1 billion yuan between the two parties,” Wanda said in the Thursday statement. “The freezing of 1.9 billion yuan worth of shares greatly exceeds the amount of financial disputes between the two parties.”
It has been a bumpy week for the commercial property developer, which has 473 malls across China. On Monday, its property-management unit suffered a credit-rating downgrade to “BB” from “BB+” because of the parent company’s weakening liquidity.
“We see heightened risks from Dalian Wanda Group’s narrowing financing channels due to extended delay in Zhuhai Wanda’s IPO,” S&P Global said while announcing the downgrade on Monday. “Weaker property sales than we expected for Wanda Properties Group, a sister company of Wanda Commercial, have worsened the situation for the group.”
This follows a downgrade on May 31 by Fitch Ratings, which estimated that if the listing is not completed by the end of 2023, Wanda Commercial will be obliged to refund more than 40 billion yuan of pre-IPO investment proceeds from minority investors, which would damage its liquidity.
Last month, Wanda fended off rumours it was selling 20 malls for 16 billion yuan and carrying out large-scale lay-offs.
In a filing dated June 2, the China Securities Regulatory Commission (CSRC) asked Zhuhai Wanda for more details on six areas in relation to its application for an IPO in Hong Kong. They involve the company’s corporate governance and internal control, accuracy of occupancy rates, independence, short-term debt repayment risk, use of IPO proceeds and dividend policy.
The firm is expected to answer the query from the CSRC to complete its listing application in Hong Kong.
