HNA Group

Debt-stricken HNA Group pledges 41pc stake in Hong Kong-listed unit as collateral for loan

Move comes a week after HNA Group sold two of its four land parcels in Hong Kong for HK$16 billion to rival Henderson Land

PUBLISHED : Wednesday, 21 February, 2018, 7:02pm
UPDATED : Wednesday, 21 February, 2018, 10:43pm

Debt-laden mainland conglomerate HNA Group has pledged 40.98 per cent of its stake in its Hong Kong-listed Hong Kong International Construction Investment Management Group (HKICIM) to PAG Holdings as security for a loan, according to the company’s disclosure to the Hong Kong stock exchange on Wednesday.

The move comes amid fundraising efforts by the group to pay down debt, including the sale of two plots of land in Hong Kong to Henderson Land Development last week.

The company did not reveal the loan amount or its purpose.

However, the pledged shares could provide HNA between HK$1 billion (US$127.7 million) to HK$1.5 billion, according to people close to the deal.

China’s troubled HNA Group flips Kai Tak plots to Henderson Land for a profit of HK$1.7 billion

Liu Junchun, vice-chairman of HKICIM, said it was the controlling shareholder HNA Group, which owns 74.66 per cent, that had pledged the shares.

He too did not provide details.

“This obviously shows the group is having difficulties in arranging syndicated loans from banks on the mainland and in Hong Kong,” said Li Kwok-suen, fund manager at Phillip Capital Management.

Pledging shares could have been the group’s last resort to raise funds, he added.

In the stock exchange filing, HNA Group said it had pledged more than 1.39 billion shares in HKICIM on February 14.

The shares were worth HK$2.96 billion based on the closing price of HK$2.12 on Wednesday, down 3.2 per cent from Tuesday’s close. HKICIM’s shares have lost about 10 per cent of their value in the last 30 days.

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Last week, the group sold two of its four residential plots at the site of Hong Kong’s former airport in Kai Tak to Henderson Land for nearly HK$16 billion, about HK$1.7 billion more than it had paid for the plots in 2016.

“The group may not generate profit from the land disposal after taking into account the interest expenses,” said one analyst requesting anonymity.

In November 2016, the Lands Department awarded New Kowloon Inland Lot No 6565 to HNA’s subsidiary, Total Thrive, for HK$8.84 billion. A month later, the group’s Sky Hero Development secured the adjacent site, Lot No 6562, for HK$5.41 billion.

HNA owns 83 per cent in the two sites, while the remaining 17 per cent is owned by HKICM.

The group paid HK$27.2 billion in total for the four sites, which it acquired in November 2016.