China’s debt-laden HNA looks to sell more assets as pressure to repay debt weighs
After US$13 billion in sales at home and abroad in recent months, next on the block are reported to be office and hotel buildings in mainland China
Embattled mainland Chinese conglomerate HNA Group is stepping up its disposals of assets with plans to sell a clutch of office buildings, hotels and other property to repay debt taken on its recent rapid overseas expansion.
A source with knowledge of the situation said the company was eager to cash out from the properties. It has already sold US$13 billion of assets in recent months as it faced increasing pressure from regulators and creditors.
The assets to be sold include the Shanghai HNA Tower, the Shanghai Yangtze International Enterprise Plaza and the Renaissance Shanghai Pudong Hotel, Bloomberg reported, adding that the combined book value of the properties is about US$2.2 billion.
HNA could not be reached for comment on Monday.
“The investment community is interested to know who the buyers of the assets would be,” said Yin Ran, a Shanghai-based investor. “They are assets worth billions of yuan and the market does not always abound with white-knight buyers.”
HNA, once a little-known airline operator, rose to international prominence amid a debt-fuelled global buying spree over the past six years. It built an empire of assets including hotel group Hilton Worldwide Holdings, airline catering giant Gategroup, aviation servicing company Swissport and a large shareholding in Deutsche Bank, among others.
But its actions stirred concerns among creditors and regulators at home and overseas, and some media reports have said it wants to sell 100 billion yuan (US$15.8 billion) of assets in the first half of this year.
Last week, Hilton said that HNA is putting its 25 per cent stake on sale. In the past months, HNA has reduced its holding in Deutsche Bank and sold properties in London, Hong Kong and Sydney.
In Hong Kong, it has sold three of its four plots of development land at the former Kai Tak airport site for a total of HK$21.53 billion (US$2.75 billion), booking a net gain of HK$2.54 billion from the transactions.
A senior official with Shanghai Pudong Development Bank, one of HNA’s creditors, said the company’s high debt ratio prompted the lenders to tighten credit to it.
HNA is not alone among Chinese companies under pressure to pare down obligations.
Anbang Insurance Group, another high-profile acquirer of foreign assets, was taken over by the government last month and is now looking for buyers for some assets. CEFC China Energy, China’s largest non-state oil conglomerate, is also under pressure to repay debts and has plans to sell some properties and equity in its units.