Wanda Sports Group, the sports unit of Chinese conglomerate Dalian Wanda, has agreed a $240m (€215.3m) senior term loan facility with Credit Suisse.
Wanda’s sports arm said that the loan agreement will enable it to refinance and prepay its existing senior 364-day loan facility (dated March 15, 2019), increasing its liquidity and reducing financing costs.
The company’s share price on the Nasdaq stock market has continued to suffer in recent weeks and fell by 26.9 per cent yesterday to $1.47. WSG also recently flagged up the potential for a “material adverse impact” on its business because of the ongoing spread of the Covid-19 virus.
However, the share price has recovered by 23.8 per cent today (to $1.82) on the back of the refinancing announcement.
Hengming Yang, WSG’s president and chief executive, said: “The successful refinancing demonstrates continued confidence in our business and operations, despite the global challenges and uncertainties resulting from Covid-19. We will continue to work diligently on behalf of our partners, athletes, fans and shareholders.”
Mr. Brian Liao, the company’s global chief financial officer, added: “As always, we are committed to lowering our costs, monitoring our use of cash, and balancing our investments with disciplined management of our existing financial resources to optimise shareholder returns.
“The new facility provides the Company with additional financial flexibility, while allowing it to take advantage of the current favourable interest rate environment to lower interest costs.”
In a filing lodged with the Securities and Exchange Commission, the US stock exchange regulator, WSG said the proceeds would be mainly used to: refinance the existing financial indebtedness of the company; fund the payment of accrued interest and other sums payable under the existing financial indebtedness; and fund the payment of fees, costs, expenses and interest incurred or payable by the company (or any subsidiary) in connection with the loans.
WSG recently warned that the Covid-19 virus threatens to have a particularly damaging impact on its mass participation events, given there are public bans of large gatherings of people in many of its major markets.
Wanda’s sports arm has cancelled or postponed mass participation events in China, Taiwan and the Philippines and, “based on the current trajectory of the spread of the coronavirus”, has warned that it expects to have to cancel more races.
WSG, which houses the Infront agency and the Ironman business, divides revenues into three core segments, namely Mass Participation, Spectator Sports and Digital, Production and Sports Solutions (DPSS).
Reporting a third-quarter loss of €31.2m ($33.7m) in November, largely due to costs related to its initial public offering (IPO) on the Nasdaq stock exchange, WSG highlighted year-on-year revenue uplifts in its Mass Participation and Spectator Sports segments.
In the three months ending September 30, the Mass Participation sector delivered €113.4m in revenues, or 46 per cent of overall revenues. This represented a 14-per-cent rise on the segment revenue reported 12 months ago thanks to the increased number of events and race participants. Third-quarter gross profit at the Mass Participation segment was €43.6m, a 15-per-cent year-on-year increase attributed chiefly to the larger number of events.
At the start of the month, WSG also warned of the effect of the Covid-19 virus on ongoing rights negotiations with clients and non clients alike given restrictions on travel, office closures and business continuity concerns.
It recently emerged that Wanda could entertain bids for its Ironman business, with Bloomberg reporting that the Chinese company has held meetings with private-equity buyers to discuss a $1bn sale. WSG bought Ironman in 2015 from Providence Equity Partners for a $650m, plus the assumption of debt.