(Bloomberg) -- Dalian Wanda Group Co. has started negotiations on a proposal that would allow the conglomerate to avoid repaying about 30 billion yuan ($4.1 billion) to investors in its shopping mall business if the unit fails to complete its initial public offering this year, according to people familiar with the matter.

Wanda is considering offering compensation to pre-IPO investors of Zhuhai Wanda Commercial Management Group Co. as an alternative to immediate repayment, the people said, potentially easing the risk of a liquidity crunch that spooked markets earlier this year. The Chinese conglomerate recently told investors that an IPO of the mall unit will likely take place next year, the people added.

Deliberations are at an early stage and it’s unclear whether any agreement will be reached between Wanda and the investors, the people said. Zhuhai Wanda could still go for a listing this year if it obtains regulatory approvals and market conditions are favorable, they added. A representative for Wanda didn’t immediately respond to requests for comment.

The development comes as Zhuhai Wanda still hasn’t been able to complete a listing in Hong Kong since it first filed for an IPO in 2021. In June, the company lodged a preliminary prospectus for the fourth time. Zhuhai Wanda is required to repay the funds to the pre-IPO investors if the company fails to list by the end of 2023, according to a China Securities Regulatory Commission letter.

Dalian Wanda was once seen as among the few high-quality Chinese issuers in the junk-bond market because it focuses on commercial real estate and asset-light property management businesses. Zhuhai Wanda itself attracted a marquee list of pre-IPO investors including Ant Group Co., Citic Securities Co., PAG and Tencent Holdings Ltd, its prospectus shows.

However, Wanda’s billionaire owner Wang Jianlin in April acknowledged some difficulties in an internal meeting, Bloomberg News reported at the time, as China’s slowing economy weighed on demand for property. Many Chinese developers are also hammered by rising interest rates as they used to rely on borrowings to fund project developments.

Wanda in July reiterated that its operation remains stable and profitability outlook is good despite credit rating downgrades by agencies including S&P Global Ratings and Fitch Ratings. It has also been able to repay its bonds.

Zhuhai Wanda managed 472 malls across China as of the end of 2022, according to its prospectus. It also had 181 projects in the pipeline, including 163 from independent third parties.

--With assistance from Emma Dong.

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