HNA Group

HNA Group reshuffles managers as it unwinds its asset acquisition spree after co-founder’s death

HNA revamps management as unwinding from aggressive investment

PUBLISHED : Thursday, 02 August, 2018, 7:40pm
UPDATED : Thursday, 02 August, 2018, 11:15pm

HNA Group, one of China’s largest global asset buyers of the past five years, has reshuffled its senior management team following the death of a co-founder, as it continues a process of unwinding its acquisitive business strategy to align with Chinese government priorities.

The company, which owns a range of assets from China’s fourth-largest airline to hotels, promoted Chief Executive Officer Adam Tan Xiangdong to chairman of the group’s overseas unit HNA International, a position left vacant by the demise early last month of Wang Jian. Tan, 51, will continue as CEO of HNA Group.

Wang was HNA’s de facto top decision maker before he died on July 3 from an accident during a business trip to France. After his passing, HNA’s co-founder Chen Feng was named group chairman.

“These changes will help us meet our commitment to refocus around our core aviation and tourism and logistics businesses,” Chen said in a press release.

Several other promotions and appointments were made in the group. Chen Chao was named executive chairman of HNA International and chief investment officer of HNA Group, succeeding Wang Shuang.

Yang Guang, who previously signalled his intention to leave HNA for a new business venture, stepped down as president of HNA Group North America and as a trustee of the Hainan Cihang Charity Foundation, a custodian of the controlling shares of the closely held group.

Every senior manager and shareholder of HNA is required by the company’s charter to donate his shares of the company to Cihang upon death, co-founder Chen said in an interview with the South China Morning Post last year.

Zhang Ling, Chen Xiaofeng, Chen Chao and Liu Daoqui were elected to the board of directors of Swissport, which HNA bought in 2015 for US$2.8 billion.

Exclusive Interview: HNA’s founder calls fugitive Guo Wengui’s patronage claims ‘a pack of lies’

The new line-up of senior management does not provide any clarity to HNA’s decision-making process or shed light on the company’s ownership, said Brock Silvers, managing director at Kaiyuan Capital, a Shanghai based investment advisory firm.

“Who holds the 15 per cent voting right in HNA Group, that was previously owned by Wang Jian?” Silvers said. “The company said the stake would be transferred to Cihang. But who are using the voting rights?”

HNA Group has snapped up an estimated US$40 billion of assets since he began on its shopping spree in 2015, driven partly by its founders’ ambitions for the group to be among the world’s 100 biggest companies. Much of all that shopping was financed by borrowings, raking up US$90 billion of debt, with 27.4 billion yuan (US$ 4 billion) of bonds due to mature in 2019, Bloomberg data shows.

That all came to a stop a year ago when China’s financial regulators ordered HNA and other asset buyers like Anbang Group and Dalian Wanda Group to cut their borrowings, unwind their positions. Beijing was worried that the shopping binge had been backed by risky financing channels that created a web of interwoven debt that involved mainland financial institutions.

Since late last year, HNA had been busy downsizing, selling its stakes in Hilton Worldwide Holdings for US$1.1 billion, a 25 per cent stake in Spain’s NH Hotel Group for US$726 million and an office tower in Minneapolis, Minnesota, for US$320 million.

In Hong Kong, the group has sold three prime plots of land at the site of the former Kai Tak airport for a combined HK$22.2 billion, after owning them for a year.

It bought four plots in the area for a total HK$27.2 billion between November 2016 and March last year.

“We have seen a tremendous amount of divestments in the earlier months, but everything they sell for now is just a small step in the right direction,” said Silvers. “The firm will face debts due in 2019, and its survival remains to be seen.”