HNA unit pledges 75pc of shares with China Construction Bank as parent looks to pare billions in debt
Six other units of the debt-ridden HNA Group have already lost US$10 billion in market value in the past month
HNA Technology Investments, a unit of HNA Group, said on Wednesday its controlling shareholder has pledged 75 per cent of the company’s shares with China Construction Bank against loans, heightening the risk of share price fall.
Companies that have pledged a large amount of shares tend to witness higher volatility in their shares as it’s difficult for them to increase their pledges when prices fall. It may cause lenders to sell these shares on the market to maintain the margin, which can lead to further price falls.
Six other units of the debt-ridden conglomerate have already lost more than US$10 billion in market value in the past month.
Controlling shareholder HNA EcoTech Pioneer Acquisition has agreed to pledge 238.89 million ordinary shares of Hong Kong-listed HNA Tech to secure a loan from China Construction Bank (Asia), the Hong Kong banking unit of CCB, China’s second largest lender by assets, according to an exchange filing.
These pledged shares account for 74.75 per cent of the total issued shares of HNA Tech.
HNA Group, which was one of China’s most acquisitive companies overseas, is now struggling to use various financing means to repay more than US$85 billion of debt incurred from its multi-year buying spree, according to Bloomberg data.