‘HNA UNIT NEARS LIQUIDITY CRUNCH’

Offshore fundraising arm’s cash and current assets cover liabilities with only 8pc headroom from 26pc in Dec

THE short-term debts of HNA Group’s main offshore fundraising arm are close to outstripping its ability to meet them, according to figures provided in documents for the acquisitive Chinese conglomerate’s most recent bond deal, where the unit paid almost nine per cent for a one-year loan.

The documents contain figures for the first nine months of the year, and show that the cash and current assets of HNA Group International Co Ltd (HNAI) cover its current liabilities — debts and payments due within a year — with just eight per cent headroom, down from 26 per cent at the end of last year.

Current assets include items such as the privately-held group’s inventory and money owed to it. The so-called current, or working capital, ratio — current assets divided by current liabilities — is a common analyst gauge of a company’s liquidity.

H NA Group’s US$50 billion (RM205.5 billion) worth of deal-making in the past two years has triggered close examination of its sprawling structure and opaque ownership, and of its use of debt to fund an acquisition spree that has included a stake of almost 10 per cent in Deutsche Bank as well as a onequarter holding in Hilton Hotels.

It also plans to take a majority stake in SkyBridge Holdings, the United States hedge fund founded by Anthony Scaramucci, US President Donald Trump’s onetime communications director.

HNA Group typically raises debt through its acquisitions — funding its aircraft-leasing business with bonds issued by that group, for example — which makes it hard to gauge the overall financial health of the group.

HNAI acts as the group’s offshore investment and foreign capital management platform and holds almost US$12 billion of group assets, according to the documents.

Yesterday it announced the purchase in Australia of Automotive Holdings’ refrigerated logistics business, for A$400 million (RM1.25 billion). Reuters