Background to the event
In 2022, in the context of the continuous downturn of the property market, many real estate companies are facing debt crises of varying degrees. Among them, the situation of Country Garden's tight capital chain is the most severe. Previously, Country Garden acquired the equity of a number of real estate companies at a high price, carried out large-scale mergers and acquisitions and expansion, and the asset-liability ratio rose sharply to nearly 90%.
Subsequently, under the pressure of the "three red lines" policy, Country Garden frequently defaulted and repeatedly failed to pay the trust loans of the project company on time. The outside world is worried that Country Garden may become the second Evergrande.
In this context, Country Garden urgently needs to obtain funds by liquidating its assets. The equity of Wanda Commercial Management Group (hereinafter referred to as "Wanda Commercial Management") held by it has become its main target for realization. Country Garden holds a 1.79% stake in Zhuhai Wanda Commercial Management, which is expected to be worth more than 30 billion yuan. If it can be successfully released, it will greatly alleviate Country Garden's urgent needs.
Wang Jianlin's 3 billion yuan unbundle process
Country Garden's shares in Wanda Commercial Management come from a listed "VAM". In 2018, Country Garden acquired about 20% of Wanda Commercial Management for about 40 billion yuan. In exchange, Wang Jianlin, the promoter of Wanda Group, promised to buy back Country Garden's real estate assets, and the two parties signed a VAM agreement.
However, the good times did not last long, and Wanda Commercial Management's listing plan was put on hold, resulting in Country Garden being unable to untie the package within the promised period. Over time, it becomes more difficult to unwrap. Until the end of 2022, under the crisis of Country Garden's broken capital chain, Wang Jianlin finally came to the rescue and repurchased 1.79% of Wanda Commercial Management shares held by Country Garden at a price of 3 billion yuan.
In this round of unraveling, Wang Jianlin can be said to be a "blood loss". According to the initial VAM agreement, the valuation of this part of the shares exceeded 30 billion yuan. But when the shares could not be listed, the trading price plummeted by as much as 90%. But for Country Garden, the successful realization of 30 billion assets is undoubtedly a timely rain. The injection of 3 billion yuan barely helped Country Garden tide over the difficulties and avoid a bigger crisis.
Impact analysis on Country Garden
The impact of this transaction on Country Garden mainly includes the following aspects:
Alleviate immediate needs and avoid greater crises
Through this transaction, Country Garden locked in 3 billion funds for withdrawal. This is undoubtedly a relief for its current predicament of tight capital chains. Although it is far less than the actual value of the equity, it is enough to help Country Garden tide over the current difficulties and avoid a greater crisis due to the inability to pay its debts.
The uncertainty of equity realization is avoided
Due to the failure of Wanda Commercial Management's listing plan, there is great uncertainty about the realization of Country Garden's equity. The price and timing of transactions are difficult to predict. However, by reaching an agreement with Wang Jianlin, Country Garden locked in a relatively reasonable price and timetable, avoided the risk of subsequent realization, and retained the enthusiasm for the company's future development.
Integrate resources and focus on the main business
The deal also means that Country Garden has withdrawn from the list of shareholders of Wanda Commercial Management. This will help Country Garden integrate resources, focus on its main business, and adjust its strategic focus. In the future, Country Garden may adopt a more cautious investment strategy to avoid over-expansion and instability of the capital chain.
The crisis of confidence still exists, and the follow-up still needs attention
Although Wang Jianlin's unwinding has brought respite, Country Garden still faces a crisis of investor confidence. Its high debt ratio and persistent default record will continue to be scrutinized by regulators and the market. It remains to be seen whether trust can be rebuilt through corrective measures.
Analysis of the impact on Wanda's existing shareholders
Wang Jianlin's release of Country Garden's equity is also bad news for the old shareholders of Wanda Commercial Management. Key impacts include:
The timetable for equity listing and settlement has been extended again
This time only a small amount of equity is involved, and the timetable for Wanda Commercial Management's overall listing and the unbinding of all old shareholders may be extended again. Stock liquidity has always been the main concern of old shareholders.
The company is once again undervalued
Wang Jianlin's low-price repurchase also once again confirmed that the equity value of Wanda Commercial Management was seriously undervalued in the case of not being able to go public. This has virtually harmed the interests of old shareholders.
Investor confidence has taken a hit
Wang Jianlin's failure to deliver on his VAM promise has also undermined investors' confidence in him, questioning his determination to protect the interests of shareholders. This may lead to new problems in investor relations management for Wanda Commercial Management.
It is still expected to be resolved through the overall listing
However, as long as Wanda Commercial Management can be listed as a whole according to the new plan, the old shareholders are still expected to get a better way out. This requires the company to accelerate the integration of resources, optimize corporate governance, and strive to obtain regulatory approval as soon as possible.
Looking ahead, real estate companies still need to operate cautiously
From Wang Jianlin's untie of Country Garden's equity, we can see that in the downward cycle, real estate companies are facing a test of continuous operation. Problems in the capital chain have frequently become the fuse that leads to corporate crises. Real estate companies need to return to prudent operation and avoid hiding risks through expansion with high debt ratios.
Looking ahead, there are still many uncertainties in the real estate industry, and the external environment faced by enterprises will be more severe.