China’s top assets buyer goes bust
HNA Group built an empire on debt that once spread from Deutsche Bank to Hilton Worldwide
Creditors of HNA Group, one of China’s largest global asset buyers, have applied to a court for the company to be placed in bankruptcy and restructured, potentially giving a fresh start for the remaining assets of the once-highly acquisitive conglomerate.
HNA Group said in a Wechat post on Friday it had been notified by a Hainan court that its creditors had acted because it was unable to pay its debts. It said it would cooperate with the court.
HNA Group was once one of China’s most aggressive dealmaking firms. It used a $50-billion global acquisition spree, mainly fuelled by debt, to build an empire with stakes in businesses from Deutsche Bank to Hilton Worldwide. Its flagship business is Hainan Airlines.
But its spending drew scrutiny from China’s central government
and overseas regulators, and as concerns grew over its mounting debts it sold assets such as airport services company Swissport and electronics distributors Ingram Micro to focus on its airline and tourism business.
It had 706.7 billion yuan ($109.78 billion) in debts at the end of June 2019, the last bond report it made public that year showed. It has not given an update since.
Its largest creditor is the state-backed China Development Bank (CDB), which also chairs the company's creditor committee. CDB did not immediately respond to a request for comment.
CAAC News, the news portal run by China’s aviation regulator, said HNA would reduce debt through measures, such as converting debt to equity or rollovers to guarantee investors' interests.