Caixin
Sep 13, 2021 08:45 PM
BUSINESS

Bankrupt HNA Secures Strategic Investors for Airline, Airport Businesses

A Hainan Airlines plane takes off from an airport in South China’s Guangdong province on July 3. Photo: VCG
A Hainan Airlines plane takes off from an airport in South China’s Guangdong province on July 3. Photo: VCG

Debt-ridden conglomerate HNA Group Co. Ltd. has finally secured strategic investors for its airline and airport businesses, seven months after it formally began restructuring as part of bankruptcy proceedings.

Liaoning Fangda Group Industrial Co. will take a stake in the airline business, and Hainan Development Holdings Co. will snap up a chunk of the airport unit, according to a notice (link in Chinese) released by HNA Sunday. The deals cover two Shanghai-listed companies — Hainan Airlines Holding Co. Ltd. (600221.SH) and HNA Infrastructure Investment Group Co. Ltd. (600515.SH).

The state-controlled Fangda was founded in 2002, with businesses focusing on steel making, pharmaceuticals, and finance. It owns the Chinese mainland-listed companies Fangda Carbon New Material Co. Ltd. (600516.SH), Zhongxing Shenyang Commercial Building Group. Co. Ltd. (000715.SZ), Northeast Pharmaceutical Group Co. Ltd. (000597.SZ), and Fangda Special Steel Technology Co. Ltd. (600507.SH).

In its most recent financial statement, Fangda reported revenue grew by 24.88% year-on-year to 1.57 billion yuan ($243 million) in the first half of 2021.

State-owned Hainan Development Holdings Co. Ltd. is a major infrastructure investment and operating entity in HNA’s home province of Hainan. As of June, Hainan Development has 99.6 billion yuan in total assets and 46.1 billion yuan in net assets, according to its official website.

No further details of the strategic investments were offered.

HNA’s creditors petitioned a court for it to begin a bankruptcy restructuring in January. Under a plan subsequently worked out by a government-appointed task force, the company is still seeking strategic investors for the retail businesses, including Shenzhen-listed CCOOP Group Co. Ltd. (000564.SZ) and stakes in Hong Kong-listed China Shun Ke Long Holdings Ltd.

Investors for its retail businesses will be announced soon, a source close to the matter told Caixin.

Founded in 1989 as a state-owned airline before becoming a privately controlled joint-stock company in 1992, HNA is fourth-largest airline group in China and operates Hainan Airlines, Tianjin Airlines, and Beijing Capital Airlines.

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Cover Story: HNA Group’s Final Crisis

The troubled firm veered away from its core aviation business with a global shopping spree over the last decade, which included buying stakes in Hilton Worldwide Holdings Inc., airport retail giant Dufy America Inc., and Deutsche Bank AG.

By the end of 2017, the firm’s assets had ballooned to 1.23 trillion yuan with total debt of 740 billion yuan. The company’s debt-fueled acquisition strategy had a hard landing after the government tightened financing rules and oversight for overseas asset buying in 2017.

HNA will be holding its second round of meetings with creditors on Sept. 27 and Sept. 30, the notice reads.

Denise Jia contributed to this story.

Contact reporter Manyun Zou (manyunzou@caixin.com) and editor Joshua Dummer (joshuadummer@caixin.com)

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