Huahua Media, the Chinese film company that recently agreed to a $1 billion slate financing deal with Paramount Pictures, has elevated a businessman with a checkered reputation to chairman and become involved with a distressed lender as it scrambles to deliver that funding, TheWrap has learned.
In the last couple months, Huahua has named a new chairman in Hong Kong businessman Kenny Huang, who has a relationship with former Paramount vice chairman Rob Moore, and become involved in a financial joint venture through collaborator Oriental Times Media with an affiliate of China Huarong Asset Management Company, a state-owned lender that specializes in distressed situations.
An individual with knowledge of the deal told TheWrap it wasn’t unusual for a Chinese company to commit to funding something and then syndicate it out to investors quietly, which he said was the case for the Paramount slate deal — but “Kenny couldn’t pull it off.” He also said the involvement of a distressed debt firm in this type of arrangement was “super weird.”
Last week, TheWrap exclusively reported that regulatory issues had postponed Oriental Times Media’s proposed $158 million purchase of Huahua — a move that could threaten the Paramount slate deal, the individual told TheWrap.
Huahua CEO Wang Kefei said the deal was “progressing as planned” in a statement provided to TheWrap Monday, which also mentioned a “multi-channel and multi-layered financial joint venture for television programs and features” that Oriental Times Media had agreed on with China Huarong Asset Management Company. The individual provided TheWrap with information that indicates Huahua itself is a party to those deals with Huarong Xinxing Asset Investment Company, a subsidiary of China Huarong.
The statement also identified Huang as Huahua’s chairman and founder, a role which had not been previously reported and contradicted a joint January statement from Paramount, Huahua and Shanghai Film Group announcing the slate financing deal, which named Wang as Huahua’s chairman. A second individual with knowledge of Huahua and Paramount’s relationship said Huang was the key figure in connecting the two and is indeed Huahua’s chairman at this point in time.
Huahua did not respond to questions about Huang’s role at the company and the nature of its involvement with China Huarong Asset Management Company. Paramount parent Viacom declined to comment.
Huang is the CEO and co-founder of Hong Kong-based QSL Sports Limited, an investment services company focused on sports. He had falsely claimed to own a 15 percent stake in the NBA’s Cleveland Cavaliers — the league denied he had any ownership in the team. And he was involved in a failed bid to buy venerable soccer team Liverpool FC, which led a former business partner to sue him for fraud and deceit in 2010 after he claimed to be working on behalf of China Investment Corp., China’s sovereign wealth fund — the CIC denied any involvement with Huang.
The two individuals described Huang as a person of questionable reputation with a history of making exaggerated statements, and the first described his involvement with Huahua as “super sketchy.”
But even with Huang’s new role and the joint venture with Huarong, the first individual said the slate-financing deal remains in jeopardy. China’s crackdown on cash leaving the country — regulators have to approve amounts of more than $5 million — and increased scrutiny of high-dollar entertainment deals have put the squeeze on the firehose of cash that had been flowing between China and Hollywood, most notably killing Dalian Wanda Group’s planned $1 billion purchase of Dick Clark Productions, as TheWrap exclusively reported.
The Wall Street Journal reported Thursday that Viacom CFO Wade Davis, who has taken on a more involved role at Paramount since longtime studio boss Brad Grey’s departure, is currently in China meeting with executives from Huahua and co-financier Shanghai Film Group to work on the slate deal.
The first individual said it is unusual that Huahua or Oriental Times would work with a lender like Huarong. He questioned why Viacom would want any kind of relationship with a distressed lender since it might have to disclose that to shareholders, which would be more unwelcome news coming from a company that’s been in transition for much of the last year. (Viacom named Bob Bakish as its new CEO last fall and is still looking for Grey’s replacement — with former Fox Filmed Entertainment boss Jim Gianopulos reported to be in pole position.)
“There’s something very strange there, for sure,” the individual said.
However, China has been a bright spot for Paramount — largely with Huahua’s help. Huahua’s marketing might helped “Transformers: Age of Extinction” march to a then-record $320 million at the Chinese box office in 2014, and Huahua and Shanghai Film Group invested in and helped push “xXx: Return of Xander Cage” to $162 million in China, more than $100 million higher than the film’s U.S. gross.