China’s HNA Group has secured strategic investors for its aviation and airport businesses, allowing the beleaguered conglomerate to move beyond the debt woes it is currently facing.
Hainan Airlines said in its 13 September Shanghai Stock Exchange disclosure that Liaoning Fangda Group Industrial was chosen as a strategic investor. A reorganization plan has also been drafted with Liaoning Fangda, which will have to be approved by a Chinese court. As for the airport business, HNA Infrastructure Investment Group said on 13 September that Hainan Development Holding has been identified as the chosen strategic investor. Similar to Hainan Airlines, a reorganization plan has been drafted and will require Chinese court approval.
Should the court grant its approvals, Liaoning Fangda will be the controlling shareholder of HNA’s aviation business, while Hainan Development will control the airports business. China Daily reported that Liaoning Fangda, a conglomerate with business in the carbon, steel, and pharmaceutical sectors, won the bid over two other interested Chinese parties: Shanghai Juneyao Group, the parent company of Shanghai-based Juneyao Airlines, as well as multi-industry conglomerate Fosun International.
The report also indicated that both Hainan Airlines and HNA Infrastructure plan to issue new shares, which will also be used to facilitate debt repayment. Before it hit trouble, HNA was a formidable force on the Chinese aviation scene that used to place big orders.
Creditors filed for bankruptcy HNA in January
HNA Group, which used to have interests in multiple industries including banking, hotels, and tourism, received notices in late January that creditors had filed for its bankruptcy, over grounds that it is unable to pay off its debts.
The South China Morning Post reported that the conglomerate was carrying a combined debt of CNY707 billion as of June 2019, and has been undergoing a “government-led revamp” over the past year. In March, a court in the Chinese province of Hainan gave its clearance for 321 companies related to HNA Group to be merged into a unified entity to facilitate restructuring.
(This is the first story of our new contributor Firdaus Hashim, who out of Singapore will on a frequent basis cover the Asia-Pacific for AirInsight)