Silver Lake to invest $600m in Wanda-owned cinema chain

The investment takes the form of convertible notes issued by AMC. Due in 2024 and bearing interest at 2.95%, they convert into class A common shares at a price of $20.50 apiece. About $421 million of the proceeds will be used to buy 24.1 million class B shares from Wanda at $17.50 each.

Assuming full conversion, Silver Lake would take a 23% stake in AMC, while Wanda’s equity interest would fall to 38% from 50.01%, although the company’s remaining 27.7 million class B shares would allow it to retain majority voting power. Silver Lake has right of first refusal should Wanda need to realize additional liquidity from the business.

A further $160 million from the notes issue will fund a $1.55 per share special dividend paid to all class A and B shareholders – which would bring Silver Lake’s conversion price down to $18.95, according to a filing. AMC’s stock jumped nearly 4.5% to $21 during early trading on September 14 but ended up closing at $19.80, down 1.49%.

AMC is the world’s largest movie theater operator with 11,169 screens in 1,014 cinemas across 15 countries as of year-end 2017, with market-leading positions in the US and in four of the five largest European economies. Revenue came to $3.23 billion in 2017, up from $2.1 billion a year earlier.

Wanda acquired AMC – then a US only business – from several PE investors for $1.2 billion in 2012. In 2016, it bought Odeon Cinema Group from Terra Firma in a $1.2 billion deal and then US-based Carmike Cinema for an undisclosed sum. Nordic Cinema Group was acquired from Bridgpoint and Bonnier Holding for $929 million early the following year. Another cinema asset, Australia-based Hoyts Group, was bought from Pacific Equity Partners in 2015 by a subsidiary of Wanda’s domestic movie theater business.

Wanda, which started out as a property developer, is also the largest movie theater operator in China. This was part of an aggressive push into sports and entertainment.

Last year, though, Wanda and three other Chinese conglomerates known for high-profile offshore transactions – HNA Group, Fosun Group, and Anbang Insurance Group – were investigated by regulators. It was subsequently reported that six Wanda deals, including the acquisitions of Odeon, Nordic, and Carmike, were flagged for violating capital outflow restrictions. AMC insisted that all its purchases were funded through US bank loans and cash, with no support from Wanda.

Nevertheless, banks were warned against lending to the conglomerate and this has prompted a string of divestments. Overseas assets sold by Wanda include a stake in Spanish football club Atletico Madrid, while there have also been substantial real estate divestments in the domestic market.

Of the other three conglomerates, Anbang was seized by the government earlier this year and HNA has been looking for ways to monetize its assets. In July, Temasek Holdings and RRJ Capital acquired a significant minority stake in Gategroup, an airline catering provider owned by HNA.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Greater China
• North America
• PIPEs
• Media
• China
• USA
• Europe
• Silver Lake
• Dalian Wanda Group