Cathay Pacific has reportedly delayed the first payment to the HNA Group for the purchase of HK Express, the low-cost airline based in Hong Kong, Forbes quoted sources familiar with the matter as saying. As earlier reported by CargoForwarder Global, HNA in March sold HK Express to Cathay Pacific Airways for HK$4.93 billion (US$628 million).
Cathay was due to pay HK$1.2 billion (US$153 million) to the debt-strapped Chinese conglomerate on May 8, but claimed it was not obligated since HK Express has failed to dispose of Boeing 747
freighter aircraft it acquired under as yet unclear circumstances, the Forbes sources claimed.
A Cathay Pacific spokesperson would not address the payment and declined to comment on the history of the aircraft, adding that Cathay still expects to acquire HK Express by December 31.
“Unusual” transaction
The Forbes report said the HK Express’ transaction to acquire three 747s was unusual, court proceedings in a civil lawsuit suggest.
A New York-based businessman, Bharat Bhise who is CEO of New York-based Bravia Capital, who brokered the deal, informed HNA executives he had arranged to pay US$1 million to acquire the
second-hand aircraft, according to email messages produced as evidence in the suit, which was filed in 2009 in the U.S. District Court for the Southern District of New York and withdrawn in 2015.
The US$1 million payment was included in a signed letter of intent for the US$67million transaction, but an HNA board member later rejected it, according to a deposition in the case.
According to the Forbes report, HK Express owns at least two 747-400SF freighter aircraft. The aircraft are leased to Turkish cargo airline ACT, which is 49% owned by HNA and a related company,
according to a U.S. regulatory filing.

Unclear ownership of one B47F
The aircraft were purchased in 2007 along with a third 747, but the current ownership of the third aircraft is unclear. It is operated by HNA’s Suparna Airlines (formerly Yangtze River Express)
in mainland China. The three aircraft were on financial lease with CDB Leasing, which said the lease ended in the second half of 2018.
In order to reduce its exposure to HNA assets and business dealings due to concerns about possible improper conduct at HNA, Cathay in its negotiations insisted that HK Express had to dispose of
the 747s, according to a source.
Avolon gave the proposed B747F deal the cold shoulder
The Forbes report also quoted sources as saying that HNA has asked leasing company Avolon to purchase the 747s from HK Express. Avolon is 30% owned by Japan’s ORIX and 70% owned by Bohai Capital,
which is majority controlled by HNA. However, Avolon is refusing to purchase the 747s until HNA pays Avolon for outstanding dues, sources say.
Although Cathay completed due diligence on HK Express before announcing the deal, sources say there are concerns more developments on HK Express' history could emerge. Also a complication is that
HK Express shareholder Zhong Guosong is refusing to sell his HK Express stake to Cathay. Zhong attempted a boardroom coup at Hong Kong Airlines, which is now in court to determine the lawful
shareholders.
This article was updated on June 14, 2019 to include comments from Bharat Bhise's spokesperson regarding the payment for the three B747s which HK Express acquired in 2007.
Nol van Fenema
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Rayhan ahmed (Tuesday, 21 May 2019 04:16)
Corrupation and deception over
Ownership of B747 freighter ....
What a disgrace!!