HNA Group is experiencing liquidity issues due to its recent global acquisition spree, but hopes to resolve the matter shortly during talks with Chinese banks and financial institutions, the conglomerate's chairman Chen Feng told Reuters.
The conglomerate, which owns shares in hundreds of companies globally ranging from airlines and hospitality chains, through finance, to property developers, is expected to outline a major restructuring in the coming days. Pending this announcement, the group's subsidiaries Hainan Airlines, Bohai Capital (parent of Avolon), technological firm Tianjin Tianhai Investments, and HNA-Caissa Travel Group have suspended trading of their shares at the Shanghai Stock Exchange in the last two weeks.
While Bohai Capital stated in a regulatory filing that it expects to resume trading within 10 days, Tianjin Tianhai Investments stock can remain suspended for as much as a month.
The restructuring will aim to create synergies and improve efficiencies between HNA Group's various subsidiaries, Chen said.
"Our business has become so big that we need to improve efficiency," the conglomerate's chairman added.
Meanwhile, the liquidity crunch at HNA Group prompted a number of Chinese banks to take action. According to Reuters, Export-Import Bank of China has formed a team to handle the conglomerate's liquidity issues, while executives from Bank of China, China Minsheng Banking Corporation, and Bank of Communications have held talks with some HNA-linked airlines to recover outstanding payments.
Reuters wrote that besides Hainan Airlines itself, Lucky Air (China) and Capital Airlines (China) are late with their lease payments, while Tianjin Airlines has reportedly asked to extend its payments' deadlines. Airfinance Journal reported in December already that some of the HNA Group subsidiaries have missed their lease instalment due dates.
The conglomerate took on significant debt in the last years due to its shopping spree which saw it acquire dozens of companies around the world, including Avolon, Gategroup, Servair, SR Technics and CIT Aerospace along multiple other travel, property, logistics and financial firms. It either owns or holds stakes in Azul Linhas Aéreas Brasileiras, TAP Portugal, Virgin Australia, Comair (South Africa), Frankfurt Hahn and Rio de Janeiro International airports, Hilton Worldwide Holdings, Swiss travel retailer Dufry, and Deutsche Bank, as well as many Chinese carriers, among others.
HNA Group's spending on acquisitions in the last three years alone could have reached nearly USD50 billion. In November 2017, The Wall Street Journal reported the conglomerate has amassed a total of USD100 billion in debt.
HNA Group's ownership structure is notoriously complicated and obscure. Bloomberg recently reported that in total there may be as many as 518 companies related by ownership to the conglomerate.
