Why AMC is distancing itself from its Chinese parent
AMC wants its investors to know that its China-based parent is largely offscreen.
The U.S. cinema chain is seeking to reassure financial markets it is unaffected by its Chinese parent's debts, saying the American unit never has relied on Wanda Group for financing.
Shares in AMC Entertainment Holdings (AMC) fell this week following reports Chinese regulators told banks Wanda's recent foreign transactions conflicted with restrictions on capital movement. Wanda bought a majority stake in AMC in 2012 for $2.6 billion.
AMC said in a statement Tuesday its three most recent acquisitions were financed by U.S. banks and it never has received loans from Chinese banks.
The company said Wanda, which also owns Hollywood studio Legendary Entertainment, has three seats on AMC's nine-member board but no role in daily management.
"AMC is an American company run from its Leawood, Kansas, headquarters by our management teams located in the U.S. and Europe," AMC's chief executive and president, Adam Aron, said in the statement.
"Wanda does not actively participate in the day-to-day running of AMC beyond the board of directors service of three Wanda executives side-by-side with six American directors," said Aron. "We greatly look forward to Wanda's continued support as an AMC shareholder."
Chinese regulators have tapped the brakes on a multibillion-dollar string of foreign acquisitions by Wanda and other companies, citing concerns they might be taking on too much debt.
Wanda announced on July 10 it would sell most of its theme parks to a Chinese buyer, Sunac China Holdings Ltd., for 63.2 billion yuan ($9.3 billion) but will continue to manage the properties.
Wanda founder Wang Jianlin told a Chinese business magazine, Caixin, the revenue would be used to repay loans. Wang was quoted as saying the company's debt load "at this point isn't heavy," but gave no details.
Wanda, which has interests in shopping malls, hotels, real estate and entertainment, became the world's biggest cinema operator with its purchase of U.S. chain AMC. It added rival Carmike Cinemas Inc. last year in a $1.2 billion deal.
Tuesday's statement said AMC paid for the Carmike acquisition with its own cash, borrowing and stock, with no contribution from Wanda.
Wanda agreed in November to pay $1 billion for Dick Clark Productions, which produces the Golden Globes and the "Miss America" pageant. The seller, Eldridge Industries, called off the deal in March, saying Wanda failed to complete the purchase.
