HNA Units Face Restructuring, Suspend Share Trading

Hainan Airlines Holding, the Shanghai-listed unit of debt-ridden HNA Group, said it is making plans that may involve a major asset restructuring, the South China Morning Post (SCMP) reported. Shares of Hainan Airlines were suspended from trading last Wednesday, at the request of the company pending an announcement.

Hainan Airlines fleet totals 300 aircraft
Hainan Airlines fleet totals 300 aircraft

The suspension was followed by a similar move last Saturday when HNA Group's Tianjin Tianhai Investment Co also suspended its shares from trading in Shanghai ahead of a "major" announcement. Tianjin Tianhai owns the group’s Ingram Micro Inc. unit.
The Chinese conglomerate has been facing increasing pressure - some banks are said to have frozen some unused credit lines to HNA units after they missed payments – following a debt-fueled acquisition spree that left it with global assets ranging from hotels and refrigerated trucks to aviation and car rentals.

Major asset restructuring?
The suspension comes just days after HNA said it would use more shares in the listed firm as collateral to meet the holding company’s cash needs.
“Important matters related to the company are being planned,” Hainan Airlines said in a filing to the Shanghai Stock Exchange. “It is still unknown whether these plans will amount to a major asset restructuring.”
The company did not specify when the shares would resume trading.
Hainan Airlines, founded by Chen Feng in 1993, has yuan-denominated A shares and hard-currency B shares listed at the Shanghai exchange. The company counts U.S. billionaire George Soros among its early investors.


“Stable and well”
The airline posted a 19% on year decline in profit for the first three quarters of 2017. Net income between January and September totaled 2.76 billion yuan (US$424 million), compared to 3.14 billion yuan in 2016. Hainan Airlines has a fleet of more than 300 aircraft and serves about 1,400 domestic and international routes.
The HNA conglomerate has risen to international prominence that saw it build up an empire of strategic assets, including hotel group Hilton Worldwide Holdings, airline catering giant Gategroup, aviation servicing company Swissport, aircraft leasing firm Avolon, Virgin Australia Airlines, and a large shareholding in Deutsche Bank, among others.
According to a Bloomberg report, HNA is under pressure to repay loans after some banks were said to have frozen unused credit lines to its units after they missed payments.
In a related development, Haitong Securities Co Ltd, the underwriter of the carrier's recent large share placement, said on Thursday that the airline was “stable and well,” in a procedural review after underwriting a 16.55 billion yuan (US$2.54 billion) private share placement by the carrier last September.

Nol van Fenema

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