Avolon downplays concerns over parent HNA’s debts
AVOLON, the Irish-run, Irish-founded aircraft lessor owned by HNA Group, is seeking to emphasise its financial independence from the troubled Chinese investment group.
Chief financial officer Andy Cronin said Avolon was unlikely to make further loans to its immediate parent and HNA unit, Bohai Capital Holding Co. He also highlighted other safeguards about Avolon’s relationship with the debt-laden Chinese conglomerate when speaking at a Goldman Sachs aircraft-leasing conference, according to a note from the bank.
“Avolon downplayed HNA’s influence and stressed protections in place, which may calm some concerns temporarily,” Goldman Sachs analysts wrote in the note. “Avolon emphasised that it is very unlikely that Bohai Capital will take another intercompany loan from the company.”
Cronin didn’t immediately return a call and email seeking comment on his remarks.
A HNA spokesman declined to comment on Avolon’s remarks or the Goldman research note. The remarks come as Fitch Ratings voiced concerns about the independence of Avolon’s decision-making process.
The credit grader raised questions about the $365m in loans the lessor made in the third quarter to Bohai. HNA has racked up billions of dollars in debt on a global shopping spree, leading to scrutiny from regulators and putting the company in the crosshairs of a Chinese government clampdown on capital outflows.
It isn’t the first time HNA’s relationship with one of the companies it has bought has resulted in credit troubles. Swissport International recently restructured its debt after HNA breached a covenant by pledging the company’s shares for collateral. The Chinese conglomerate is the largest shareholder of Deutsche Bank.
Board director Zhao Quan said in an interview on Friday that HNA wouldn’t default in the coming year after an airline unit scrapped a bond sale because of soaring financing costs.