Wanda Cinema's "penetrating" disclosure of the counterparty's estimated value-added rate of approximately 171.46%

Two weeks after Wanda Cinema's (002739)372-yuan acquisition plan was inquired by the Shenzhen Stock Exchange, the company disclosed its reply letter late yesterday and also released a revised version of the transaction plan. After application, trading of the company's shares will resume today.

Original title: Wanda Cinema's penetrating disclosure that the counterparty will resume trading today

. Two weeks after Wanda Cinema's 37.2 billion yuan acquisition plan was inquired by the Shenzhen Stock Exchange, the company disclosed its reply letter yesterday evening and released a revised version of the trading plan. After application, trading of the company's shares will resume today.

The transaction plan shows that Wanda Cinema Line plans to issue shares to 33 counterparties including Wanda Investment to purchase its 100% stake in Wanda Film and Television. The estimated value of 100% equity interest in Wanda Films is about 37.5 billion yuan, and all parties negotiated and temporarily determined that the transaction price of the underlying asset is 37.204 billion yuan. At the same time, the company plans to issue shares at a price of no less than 74.84 yuan/share to raise matching funds of no more than 8 billion yuan.

Before this transaction, Wanda Film and Television integrated Qingdao Film and Television and Mutual Love Interaction with itself as the main body. Among them, Qingdao Film Investment holds 100% shares of Legend Pictures, LLC and all of its subsidiaries (hereinafter referred to as "Legend Pictures"). With the injection of Wanda Film and Television, Wanda Cinema will realize the integration of the entire industry chain of the film industry.

In

response to the Shenzhen Stock Exchange inquiry letter from 192 counterparties, Wanda Theater Company made a "penetrating" disclosure of all partners in the limited partnership among the counterparties. Among them, 21 counterparties belong to limited partnerships. Except for Xin County Rongzhi Industrial Management Consulting Center (Limited Partnership), which is an employee stock ownership platform, other limited partnerships are all private investment funds. Wanda Cinema stated that the above-mentioned limited partnership's investment in Wanda Film and Television is a financial investment behavior, and the purpose of the investment is to obtain investment returns through equity investment.

It is worth noting that Huayi Brothers Media Co., Ltd. also appears behind Fuhui Yinghua (Tianjin) Enterprise Management Center (Limited Partnership), and the date of obtaining rights is shown as June 2015. The employee stock ownership platform Xin County Rongzhi Industrial Management Consulting Center (Limited Partnership) includes 19 partners including Beijing Wanda Cultural Industry Group Co., Ltd. and Wang Jianlin.

In addition, some partnerships made internal equity structure adjustments after the reorganization plan was disclosed. The reply letter shows that some partners in Tianjin Dingshi No. 1 Asset Management Partnership (Limited Partnership) transferred their partnership interests in Tianjin Dingshi and Shanghai Linyue Equity Investment Partnership, a limited partner of Qicheng (Shanghai) Investment Center (Limited Partnership), some partners in the Investment Partnership (Limited Partnership) transferred their interests in Shanghai Linyue Equity Investment Partnership to Beijing Wanda Investment Co., Ltd.

Wanda said that based on the structure of the counterparties after completing equity adjustments, as of the date of issuance of the reply, after penetration calculations (up to the natural person and legal person levels), all counterparties who purchased assets in this issue have a total of 192, which is in line with the relevant provisions of issuing objects in principle. No more than 200 people.

In

addition to the above-mentioned "penetrating" disclosure issue, the performance commitment of the target party has jumped significantly compared with historical performance and has also attracted regulatory attention. The Shenzhen Stock Exchange requires the company to explain the estimated value of the reorganization target, transaction price, and performance commitment in 12 categories and a total of 22 sub-categories issues, including the rationality of the commitment.

According to the reply letter, the valuation of the underlying assets has not yet been completed. The estimated value of 100% equity of Wanda Films is about 37.5 billion yuan, and the estimated value-added rate is about 171.46%.

Regarding comparable transactions and comparable companies, the company stated that the main business of the target company is domestic film production and distribution, overseas film production and online game distribution, and its business regions cover the markets of the United States and China. There are relatively few comparable transactions and comparable companies.

In terms of performance commitments, Wanda Investment promised that the cumulative net profit attributable to the parent after deducting non-profit in the consolidated statements of Wanda Films for 2016, 2017 and 2018 will not be less than 5.098 billion yuan. Among them, Wanda Film and Television before integration is expected to achieve a net profit of 1.2 billion yuan during the performance commitment period; Legendary Pictures is expected to achieve a net profit of 3.1 billion yuan during the performance commitment period; Mutual Love Interactive is expected to achieve during the performance commitment period. The net profit is 798 million yuan.

Financial data shows that Wanda Films 'net profit attributable to its parent company in 2014 and 2015 was-2.691 billion yuan and-3.97 billion yuan respectively. Among them, Legendary Pictures suffered losses for two consecutive years, dragging down the consolidated performance. In 2014 and 2015, Legendary Pictures 'net profit was-2.243 billion yuan and-3.628 billion yuan respectively.

Regarding the large increase in Wanda Film and Television's promised net profit compared with historical results, Wanda Cinema responded that Legend Pictures's losses were mainly due to the recognition of equity incentive fees, high advertising and distribution costs, and the provision of large asset impairment losses. It also stated that as of the date of issuance of the reply, all Legendary Pictures 'share options have been exercised and will no longer have an impact on future results. Other loss factors are also expected to be controlled. The company believes that the target company's commitment of net profit is reasonable.

Regarding the filing and registration procedures of private investment funds among counterparties concerned by the market. The company stated that as of the date of issuance of the reply, all private investment funds other than the Hengqin Recruitment Certificate among the counterparties had completed the registration procedures for private investment funds. The private equity fund registration procedures for Hengqin Recruitment are being processed, and Hengqin Recruitment has made a commitment to handle the registration of private equity investment funds.

In addition, Wanda Cinema also responded one by one to other issues such as whether the company can implement effective control over the overseas operating entity Legendary Pictures after the completion of the reorganization, and specific measures to ensure the stability of the management team and core personnel after the reorganization.

Editor: yvette