Wang Jianlin became the real controller of WANDA CINEMAS, and Ke Liming, the chairman of China Ruyi, went to the next city.
Ke Liming has been planning the listing of Confucian and Italian films since 2014. Nearly ten years later, with the announcement of changes in WANDA CINEMAS’s rights and interests on December 16, Ke Liming officially took over from Wang Jianlin and became the actual controller of WANDA CINEMAS, a listed company with a market value of 100 billion yuan.
With 882 million self-owned funds and 1.293 billion loans, Ke Liming became the actual controller of WANDA CINEMAS.
WANDA CINEMAS further announced the situation of changes in equity. The main body of Wanda Investment’s equity acquisition this time is Confucianism and Italian Investment. Confucianism and Italian Investment is 99% owned by Ke Liming, 1% by Beijing Zhumeng Qiming, and Beijing Zhumeng Qiming is wholly owned by Ke Liming.
According to the announcement, as of the end of September 2023, the total assets of Confucianism and Italian investment were about 271 million yuan, of which the balance of monetary funds held by enterprises was about 215,100 yuan. The total debt is 305 million yuan, and the asset-liability ratio is 112.49%. In the first three quarters, the investment revenue of Confucianism and Italy was 803,500 yuan and the net loss was 3,261,900 yuan.
The other side of this transaction is Wanda Culture, Beijing Hengrun and Wang Jianlin, who hold 20%, 29.8% and 1.2% of Wanda Investment respectively, making a total of 51%. According to the agreement, the above three parties will transfer 51% equity of Wanda Investment to Ruyi Investment at a consideration of 2.155 billion yuan. In July this year, Ruyi Film and Television, a listed company controlled by China Ruyi Agreement, bought a 49% stake in Wanda Investment for a consideration of 2.262 billion yuan.
After the completion of this transaction, Keliming will indirectly control 20% equity of WANDA CINEMAS through Wanda Investment and become the largest shareholder of the enterprise. The shareholding ratio of Wanda Culture and its concerted actors will drop to 10.9%. At this point, Ke Liming will replace Wang Jianlin and become the actual controller of WANDA CINEMAS.
In addition to the above two shareholders, Lu Lili, the wife of Shen Jun, the founder of Oriental Fortune, a listed company, is the third largest shareholder of the company, with a shareholding ratio of 8.26%. In addition, Hangzhou Zhenxi Investment, GF Securities, China Merchants Securities and other institutions are also among the top ten shareholders of the company.
From the source of funds, the announcement shows that the main investor of the acquisition of 51% equity of Wanda Investment is Ke Liming himself. In 2015, Ke Liming sold 49% of the equity of Ruyi Film for 1.323 billion yuan to the M&A fund of Tianshen Entertainment. Therefore, he has strong financial strength. Of the consideration of 2.155 billion yuan in this transaction, Ke Liming will contribute 882 million yuan with his own funds. The remaining 1.293 billion yuan was supplemented by bank loans applied by Confucianism and Italy.
After Ke Liming becomes the actual controller, he will continue to hold the management right of WANDA CINEMAS. According to the announcement, within one month after the equity delivery, Wanda Culture and its concerted actions should urge more than half of WANDA CINEMAS’s directors to resign and be replaced by the candidates recommended by Ruyi Investment, and the directors recommended by Ruyi Investment should serve as the chairman and legal representative. Wanda Culture has the right to retain two seats on the new board of directors.
After the completion of this acquisition, whether the listed company WANDA CINEMAS and its huge Wanda Cinema under its name will be renamed is also a matter of concern. According to the announcement, the scope of the equity transfer transaction does not include Wanda Investment and trademarks with "Wanda" in Chinese and English owned by enterprises such as WANDA CINEMAS. If Wanda Investment and WANDA CINEMAS need to continue to use trademarks such as WANDA CINEMAS, Wanda International Film, Wanda Cinema and Wanda Cinema in the future, they need to sign additional agreements with Wanda Culture and other relevant parties.
However, in terms of business development, WANDA CINEMAS is still supported by Wanda. At present, Wanda Culture has prompted Wanda Commercial Management to adjust the lease term for WANDA CINEMAS, and adjust the contract with less than 10 years to not less than 10 years, and it can be extended for another 10 years after the 10-year lease.
Wanda investment, which is in urgent need of capital turnover, still needs to solve the sequelae of previous performance gambling. In 2019, WANDA CINEMAS bought Wanda Film and Television from Wanda Investment and other entities in a fixed way. Wanda Investment signed a gambling agreement with WANDA CINEMAS, and the gambling period was 2018 -2022 (extended by one year due to the epidemic). At present, the performance of Wanda Film and Television in 2022 failed to meet the performance promise, which also triggered the compensation clause in the gambling agreement. In this acquisition, the transferor, such as Wanda Culture, also promised to handle the compensation obligation to avoid the negative impact on the reporting rights and interests of Confucian and Italian investment.
Deeply cultivate the capital market, or will control China Confucianism
As the protagonist of this acquisition, Ke Liming was born in 1983. After graduating from junior high school, he went to Australia to study abroad. In 2006, he obtained a master’s degree in money and banking from Griffith University in Australia. Since then, Ke Liming chose to return to China to work, first in Hong Kong for financial work, and then in Beijing, and began to enter the film and television industry.
As an investor and producer, Ke Liming has participated in the production of TV series such as Frontier of Love, No War in Peiping, nirvana in fire, legend of miyue, Let’s Love, and never gone, To Our Dying Youth, The Old Boy Raptors Across the River, Sewing Machine Band, A Little Red Flower, Hello Li Huanying, etc.
During this period, Ke Liming also tried to send Confucian and Italian films into the capital market. In 2014, the listed company Zhongji Holdings had planned to acquire Ruyi Film at a consideration of 1.5 billion yuan, but the transaction was finally stopped by the CSRC. Since then, the film industry of Confucianism and Italy has had close relations with Tianshen Entertainment and Ji Xiang, a subsidiary of Shanshan.
In 2020, Hengteng Network, a Hong Kong-listed company controlled by China Evergrande, reached an agreement with Ke Liming. In October of that year, Hengteng Network acquired Virtual Cinema Entertainment Co., Ltd. (VCEL) for a consideration of HK$ 7.2 billion, and controlled three companies, namely Ruyi Film, Beijing Jingxiu and Beijing Xiaoming, through VCEL.
Through this acquisition, Hengteng Network has acquired the film and television drama production business and online streaming pumpkin movies under the Ruyi Film Industry, and as a result, the company’s performance has achieved substantial growth. In 2021, Hengteng’s network revenue reached 2.319 billion yuan, up 840.21% year-on-year, and its net profit was 1.175 billion yuan, up 9676.57% year-on-year.
However, in 2021, with the continuous reduction of Evergrande’s shares in Hengteng Network, Ke Liming became the chairman of the company, and Hengteng Network was renamed China Ruyi the following year.
After Ke Liming took the helm of China Confucianism, he made three increases and raised a total of HK$ 6.64 billion.
In January 2022, China Ruyi issued 64 million shares to Water Lily, a subsidiary of Tencent Holdings, and 56 million shares to Liu Xue Heng, an investor, at a consideration of HK$ 2.50 per share, raising a total of HK$ 300 million. In July 2022, China Confucianism issued 163 million shares to Water Lily, 488 million shares to Sunshine Life and 325 million shares to China Handi at a consideration of HK$ 2.40 per share, raising a total of HK$ 2.340 billion. The above two fixed fund-raising activities are mainly used to expand the company’s business and supplement working capital.
In July, 2023, the company again threw out a fixed increase case, and issued 500 million shares to Water Lily, Liu Xueheng, Cubract Ventures, Yushan and Chengwan Development at a consideration of HK$ 1.6 per share, raising HK$ 4 billion. Of this fixed fundraising, 2.469 billion Hong Kong dollars (about 2.262 billion yuan) was used to acquire 49% equity of Wanda Investment. The rest of the fundraising is also used for business expansion and supplementary working capital.
As of August 31st, the largest shareholder of China Ruyi is Tencent Holdings, with a shareholding ratio of 23.80%, and Ke Liming holds 16.34% of the total share capital of China Ruyi, making it the second largest shareholder. At the same time, Ke Liming was awarded the warrants of 1.834 billion shares of China Confucianism through the personal wholly-owned company Pumpkin Films Limited. If the gambling is completed, this part of the warrants will be converted into ordinary shares, which means that under the existing shareholding ratio distribution, Ke Liming will become the largest shareholder of China Confucianism and Italy after completing the gambling commitment, and the shareholding ratio will reach 34.84%, or will win the control of China Confucianism and Italy.
By the end of June, 2023, the total assets of China Confucianism and Italy were 13.048 billion yuan, including 889 million yuan in cash and cash equivalents, 5.332 billion yuan in total liabilities and 40.86% in asset-liability ratio. In the first half of 2023, China’s revenue of Confucianism and Italy was 804 million yuan, up 23.36% year-on-year. During the period, it lost 264 million yuan, turning from profit to loss.
Increase the number of cinemas and open up the upstream and downstream industrial chains
The acquisition of WANDA CINEMAS, or will also make Ke Liming further in the film and television industry. WANDA CINEMAS also said in the announcement that Keliming’s acquisition of the equity of Wanda Investment was mainly due to the recognition of WANDA CINEMAS’s long-term investment value and confidence in its future development prospects.
In the first three quarters of 2023, WANDA CINEMAS achieved an operating income of 11.348 billion yuan, a year-on-year increase of 46.98%, and a net profit of 1.128 billion yuan, which also turned losses into losses. In terms of film production, in the first half of 2023, a number of films, such as Seeing You, Cosmic Exploration Editorial Department, Wandering Earth 2, Passion, and Put All Your Eggs in One Put, were released.
However, film production and distribution is not the main revenue source of WANDA CINEMAS. In the first half of 2023, this business only accounted for 2.93% of the total revenue of WANDA CINEMAS. The cinema assets it owns are the bulk of the company’s revenue.
According to the financial report, by the end of the first half of 2023, WANDA CINEMAS had 708 direct-operated cinemas and 149 light-asset cinemas, ranking first in the country in box office market share for 14 consecutive years.
In the first half of 2023, WANDA CINEMAS’s movie revenue alone reached 4.042 billion yuan, accounting for 58.84% of the total revenue. In addition, the sales revenue of goods, catering and advertising generated around cinemas also reached 983 million yuan and 610 million yuan respectively.
This article comes from: Cat Finance
