Apr 04, 2020 04:40 AM

HNA’s Swissport Hires Houlihan Lokey to Advise on Debt

Photo: Bloomberg
Photo: Bloomberg

(Bloomberg) ― Swissport International AG, the airport ground services business owned by beleaguered Chinese conglomerate HNA Group Co., hired advisers to review its debt as passenger air traffic grinds to a halt amid the coronavirus pandemic.

The company appointed boutique financial services company Houlihan Lokey Inc. and lawyers White & Case LLP to help the unit “strengthen its financial position,” Swissport said Friday. Swissport is considering a restructuring of its 1.6 billion euros ($1.7 billion) of debt.

“Swissport is engaging with governments and financial institutions to seek support in these unprecedented times,” it said in an emailed statement.

The company will lay off 40,000 employees by the end of the month, more than half of its workforce, it said.

Swissport joins a growing list of companies in vulnerable industries such as travel, energy and retail trying to lessen their debt load or requesting state aid. Offshore drilling company Valaris Plc last month hired advisers to help plug a hole in its balance sheet left by plunging oil prices.

TUI AG, the world’s biggest tour operator, secured a 1.8 billion euro loan from state-run KfW bank in one of the biggest bailouts in Germany so far stemming from the virus.

Swissport refinanced its debt just last summer. Restrictions imposed on air travel because of the coronavirus pandemic, however, triggered a liquidity crisis.

The company said last week it could run out of cash by early summer if the outbreak is harsher than expected or if it’s unable to secure government support and third-party financing.

Swissport’s junior debt collapsed 41 cents on the euro to 5 cents Friday, according to data compiled by Bloomberg. It was trading above face value a month ago. The company’s secured bonds fell 11 cents on the euro to 48 cents, the data show.

“While Swissport had over 300 million euros in available liquidity as per February 2020, the company is taking additional steps to manage its cash position and further strengthen its ability to navigate through the crisis and cope with the market collapse,” the company said in its statement.

HNA’s attempts to sell Swissport, which it bought for 2.7 billion Swiss francs ($2.8 billion) in 2015, have failed in the past. China began assuming control of debt-laden HNA last month, paving the way for a hastened selloff of the once-sprawling conglomerate’s remaining assets.

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