HNA Group

Boss of China’s HNA Group steers away from controversy in speech to Chinese business forum

Chen Feng makes rare public appearance in Hainan but talks only of his ambitions for conglomerate

PUBLISHED : Sunday, 10 December, 2017, 10:40pm
UPDATED : Monday, 11 December, 2017, 5:16pm

The founder of Chinese conglomerate HNA Group, which has been in the regulatory spotlight for its high-profile acquisitions, steered away from controversy at a business forum on Saturday as he outlined plans to grow the company’s flagship airline despite concerns among creditors and bankers of its soaring debt burden.

Speaking at the Caijing forum in Sanya, southern China’s Hainan province, Chen Feng said the airline-to-finance group, with combined revenue of US$53 billion in 2016, was set to climb the ranks of the world’s top 500 companies published by Fortune magazine. It ranked 170th this year.

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“This year, we will rank higher. We are a global company with three-quarters of our 400,000 staff based overseas,” he said. “We created a world class aviation brand. I am proud to say that ours is Chinese-made Hermes in global aviation.”

Chen’s presence at the event was designed to assure creditors and shareholders that all is well with the group, which was one of several asset buyers scrutinised by China’s banking regulators earlier this year for its debt exposure.

The conglomerate is under financial pressure after nearly a decade of spending. In October, it sold a one-year bond with a coupon of 9 per cent in a bid to raise fresh funds and sustain its debt-ridden balance sheet.

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Ratings agency S&P said in a recent report that HNA’s aggressive financing had damaged its creditworthiness and warned of “tightening liquidity”.

One of HNA’s biggest deals last year was the HK$27.2 billion (US$3.48 billion) purchase of a plot of land for a residential development in the Kai Tak area of Hong Kong.

In September, Bloomberg reported that at least four of the eight banks known to have provided a combined US$1.5 billion worth of short-term financing for HNA’s land buys had decided not to renew the credit and did not intend to extend fresh loans to fund construction.

However, Liu Junchun, an executive with HNA’s private overseas investment unit, told the Post at the time that it had “sufficient capital” to finance its projects.

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Adam Tan Xiangdong, HNA’s chief executive, told reporters in Beijing last month that the company would not invest in areas blacklisted by the government and was prepared to sell some of its overseas property projects in areas described by regulators as “irrational”, including foreign sports clubs and entertainment projects.

HNA’s murky ownership structure has also added to the group’s troubles. It is currently facing an investigation by the Swiss Takeover Board into its “untrue” disclosure of its shareholding structure during its US$1.5 billion takeover of the Swiss airline catering firm Gategroup last year.