Exclusive | China’s embattled HNA shuts Hong Kong unit as it struggles to repay debt
The closure of HNA Innovation Finance is part of the group’s downsizing effort, which includes a slew of overseas and domestic asset disposals, to slash debt
HNA Group is closing down a Hong Kong-based unit and merging its assets into the group’s logistics arm as the debt-laden conglomerate struggles to rapidly restructure and dispose of assets to repay debts, according to sources.
The company confirmed in a brief statement that operations at HNA Innovation Finance – set up only in March 2017 at the height of the group’s aggressive ambition – will be “integrated” into HNA Logistics, one of the main units of the conglomerate, to “concentrate resources and focus on development”.
The company didn’t provide additional specific details, but sources said HNA Innovation Finance was dismissed and an identified number of employees were laid off. The unit was launched as a platform for the group to expand its commodities and logistics businesses, aligning corporate interests with China’s Belt and Road Initiative, which included taking a stake last year in Glencore’s oil product assets.
Its unmaking is part of the group’s downsizing effort to trim its debt amid China’s crackdown on its global dealmakers’ risky financing. In addition, with HNA Group’s shift of focus to businesses that toe the government line, the role of HNA Innovation Finance has become an extra layer of cost and overlap.
“The purpose of the unit is lost since HNA's priority has changed from expansion to cutting debt … so it is being dismissed,” said one of the sources familiar with the matter but who declined to be named as they are not authorised to speak.
Through the HNA Innovation Finance vehicle, the group bought a 51-per cent stake in Swiss commodities trader Glencore’s oil products storage and logistics assets and Singaporean warehouse and delivery operator CWT. CWT assets were added to the Hong Kong-listed company renamed CWT International, a deal that received plaudits from Chinese state mouthpiece media. The Glencore acquisition made last December as an HNA Innovation Finance deal is now described as one by the group, according to a timeline on the HNA website.