China's Fosun explores sale of Atlantis Sanya luxury resort, sources say

Fosun Tourism

05/03/2024 07:13

(Adds share reaction, details on Fosun debt and resort's
business performance from paragraph 10)
    By Julie Zhu and Kane Wu
       HONG KONG, March 5 (Reuters) - Fosun International
 0656.HK  is looking to sell all or part of its luxury resort
Atlantis in southern China as part of its efforts to reduce
debt, three people with knowledge of the matter said.
    Located on Hainan island, known as China's Hawaii, in the
seaside city of Sanya, the integrated resort spans an area
equivalent to 66 soccer pitches. It boasts a hotel with more
than 1,300 guest rooms - some with views of underwater marine
life - as well as a water park, an aquarium and a shopping mall.
    Fosun, known for once being one of China's most
acquisition-hungry conglomerates, has sent information to
prospective buyers and advisers and has been in informal
discussions with them in recent months, said two of the people.
    A potential deal value for Atlantis Sanya could not be
immediately learned. Fosun said in 2018 it had invested 11
billion yuan ($1.5 billion) in the resort.
    The sources declined to be identified as the discussions
were confidential. Fosun and its Hong Kong-listed unit Fosun
Tourism Group  1992.HK , which owns the resort, did not
immediately respond to requests for comment.
    A sale would be further evidence that the conglomerate,
which had some $30 billion in debt as of last June, is willing
to roll back its presence in the tourism sector. Fosun Tourism's
other main asset is Club Med and sources have said that the
conglomerate is exploring the sale of a minority stake in the
luxury resort chain.
    According to two of the sources, Fosun has targeted mainly
Chinese state-backed firms and deep-pocketed investors from the
Middle East as potential buyers for Atlantis Sanya. 
    It is open to selling the whole business or the luxury hotel
alone, said one of them.
    Fosun Tourism, which has a market value of about HK$5.2
billion ($665 million), accounts for 9% of Fosun International's
overall revenue. The conglomerate's other businesses span
healthcare, financial services and property.
    Fosun Tourism shares were down 5% in Hong Kong afternoon
trade, underperforming the benchmark Hang Seng index  .HSI 
which lost ground after Beijing did not unveil large stimulus
plans at the beginning of China's week-long parliament session.
Shares in Fosun International were 3% lower, in line with the
Hang Seng.
    Fosun has also been selling some other assets. It said in
January it planned to sell a 5.6% stake in Portuguese lender
Banco Comercial Portugues  BCP.LS  for 235 million euros ($255
million) to boost its working capital.
    According to Fosun International's 2023 interim report,
medium-to-long-term debt accounts for roughly half of its debt
and it has a debt-to-equity ratio of 52%.
    S&P Global said in a report in May last year that Fosun
could continue to rely on asset sales and domestic banking
support to reduce its debt burden.
    Atlantis Sanya, like many resorts, was hard hit during the
pandemic years but business has since improved.
    The resort, which was inspired by the Atlantis, The Palm
resort in Dubai, attracted about 3.2 million visitors in the
first half of 2023 and had a room occupancy rate of 86%.
    Revenue jumped 82% from a year earlier to 887 million yuan
during the period and adjusted earnings before interest, taxes,
depreciation and amortisation (EBITDA) more than doubled to 460
million yuan.
    
($1 = 7.1993 Chinese yuan)
($1 = 7.8252 Hong Kong dollars)
($1 = 0.9217 euros)

 (Reporting by Julie Zhu and Kane Wu; Editing by Edwina Gibbs)
 ((julie.zhu1@thomsonreuters.com;))