(Yicai Global) July 20 -- Share prices have surged at Wanda Commercial Properties Co. [HKG:3699], Sunac China Holdings Ltd. [HKG:1918] and Guangzhou R & F Properties Co. [HKG:2777] after the trio signed a CNY63.2 billion (USD9.4 billion) deal yesterday with the latter crashing a signing ceremony between the two former companies.
R & F's share price rose 9.13 percent this morning to close at HKD14.1 (USD1.81), while Sunac's climbed 6.4 percent to HKD18.3 and Wanda's jumped 11.69 percent to HKD0.86. Sunac stock peaked at over HKD20, a rise of more than 17 percent, and was 16.05 percent up at mid-day.
R & F purchased its stake in Wanda's 77 city hotels for just CNY19.9 billion (USD2.9 billion), compared with Sunac China's previously planned price of CNY33.6 billion. To compensate this, Sunac's stake in Wanda's 13 theme parks leapt from CNY29.6 billion to CNY43.8 billion, the trio said yesterday.
The deal saw Wanda improve liquidity, meant Sunac no longer needed to set up another hotel management team, and made R & F Properties the largest owner of hotel assets in the world, China Real Estate quoted Li Silian, co-chairman of R & F, as saying yesterday.
Although the cost to Sunac jumped by more than CNY10 billion, Sun Hongbin, chairman, said the premium was acceptable. Compared with the original plan, the change meant better liquidity for the firm and lowered its debt level.
Standard & Poor's and Fitch, two of the three major international rating agencies, previously downgraded their credit rating for Sunac due to its high debt ratio, and Moody lowered its outlook on July 18. On that day, the company's share price plunged 12 percent.