Caixin
May 29, 2020 04:43 AM
BUSINESS & TECH

Panama Shipper Seeks to Wind Up Debt-Ridden HNA Group, Again

HNA’s net assets dipped to about 980 billion yuan in the middle of last year from 1.2 trillion yuan in 2017.
HNA’s net assets dipped to about 980 billion yuan in the middle of last year from 1.2 trillion yuan in 2017.

Panama-based shipping services provider China Joy Shipping Inc. filed a petition in Hong Kong to liquidate debt-laden HNA Group Co. Ltd., renewing a 2012 attempt to wind up the Chinese conglomerate.

A Hong Kong court is set to hear the case Aug. 26, according to records on the Hong Kong Judiciary’s website. No details of the complaint were made public.

China Joy, which registered its business in Hong Kong in November 2010, terminated operations in the city in March. The company filed for HNA’s liquidation with Hong Kong’s High Court in 2012 after a debt default but later withdrew the case as HNA promised to repay an outstanding debt of $400,000.

The incident is another blow to once high-flying HNA, which is struggling to pay off a mountain of debt built up during a multibillion yuan global spending spree in which borrowings surged to as much as 700 billion yuan ($99 billion).

The company, whose businesses range from aviation to real estate to financial services, is one of several Chinese conglomerates that embarked on aggressive buying campaigns in the 2010s, only to later struggle under huge debt loads. Others include Anbang Insurance Group Co. Ltd. and Dalian Wanda Group Co. Ltd. Since 2017 HNA has steadily pared back its assets, selling stakes in hotel giant Hilton Worldwide Holdings Inc. and a number of real estate holdings.

The government of Hainan province in southern China, where HNA is headquartered, set up a working group in February to organize a rescue of the company, which faces a severe cash crunch after its financial situation further deteriorated as a result of the coronavirus pandemic.

As Covid-19 outbreak continues pummeling the global travel industry, HNA’s core business unit Hainan Airlines Holding Co. Ltd. is being hit hard. The carrier, China’s fourth-largest, posted a 6.3 billion yuan net loss in the first quarter, compared with a 1.1 billion yuan profit a year earlier, its worst result since at least 2003. Revenue slumped 63% to 6.9 billion yuan, according to the company’s financial report.

Last month, HNA enraged bondholders by calling a last-minute meeting to approve a plan to delay repayment of a 390 million yuan ($55.3 million) domestic bond to avoid immediate default. Some bondholders filed complaints with regulators accusing the company of manipulating the vote.

HNA had as much as 1.2 trillion yuan in assets in 2017 at the height of its buying binge. But the total has declined steadily as the company sells off assets, some of which have lost value since their original purchase. Net assets dipped below 1 trillion yuan to about 980 billion yuan in the middle of last year, according to the 2019 mid-year report.

Tang Ziyi and Yang Ge contributed to this story.

Contact reporter Han Wei (weihan@caixin.com) and editor Bob Simison (bobsimison@caixin.com)


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