HNA Group Co (海航集團) agreed to sell two plots of land in Hong Kong to the territory’s second-richest man for HK$16 billion (US$2 billion) as the cash-strapped Chinese conglomerate accelerates asset disposals to repay its mounting debt.
The sites, purchased just over a year ago, were sold to billionaire Lee Shau-kee’s (李兆基) Henderson Land Development Co (恆基地產), according to a statement yesterday.
HNA had spent about HK$14.2 billion on the two sites, according to records from Hong Kong’s land registry.
The disposal might help ease the financial strain HNA has been under after spending tens of billions of dollars on debt-fueled acquisitions to snap up assets including big stakes in Deutsche Bank AG and Hilton Worldwide Holdings Inc.
The group has told creditors it could have a liquidity shortfall of at least 15 billion yuan (US$2.4 billion) in the first quarter and that HNA is targeting about 100 billion yuan in asset sales during the first half, people familiar with the situation have said.
HNA bought four plots at the former Kai Tak airport for a total HK$27.2 billion between November 2016 and March last year, outbidding local developers for sites that were among the most hotly contested during that period.
The sale to Henderson is expected to close Feb. 14, according to the statement.
Separately, HNA has held preliminary talks with investors including Brookfield Asset Management Inc about selling a pair of office buildings in London’s Canary Wharf district, according to people with knowledge of the matter.
In the US, the Chinese conglomerate is selling properties valued at about US$4 billion — including the 245 Park Avenue skyscraper it bought less than a year ago for one of the highest prices ever paid for a building in New York — according to a marketing document seen by Bloomberg.
Late last month, HNA agreed to sell a Sydney office building to Blackstone for A$205 million (US$161 million).
Still, HNA, which does not earn enough profits to cover its interest payments, has been facing increasing skepticism from bond investors whether asset sales and lender lifelines will be enough to help the conglomerate roll over borrowings.
The yield on HNA’s yuan-denominated bond due next year has almost doubled this year to 14.2 percent, according to exchange data.
That is about three times higher than the average yield on other notes with similar “AAA” local ratings, and twice that on securities with credit scores considered junk in China.
“With investor risk appetites more subdued in the wake of rising rates and widening credit spreads, it is difficult to envision HNA and its subsidiaries being able to tap either the onshore or offshore bond markets over the near future,” said Todd Schubert, head of fixed-income research at Bank of Singapore Ltd.
HNA, one of the most prolific Chinese buyers of foreign assets until the government started frowning on capital outflows, is not alone in feeling the heat.
Blackstone Group LP has held initial discussions about bidding for Anbang Insurance Group Co (安邦保險集團) assets — including New York’s Waldorf Astoria hotel — in a sale overseen by the Chinese government, people with knowledge of the matter have said.
Wang Jianlin (王健林), whose group controls AMC Entertainment Holdings Inc and was once China’s richest man, is retreating from ambitions to build an empire that could challenge Walt Disney Co.
ISSUES: Gogoro has been struggling with ballooning losses and was recently embroiled in alleged subsidy fraud, using Chinese-made components instead of locally made parts Gogoro Inc (睿能創意), the nation’s biggest electric scooter maker, yesterday said that its chairman and CEO Horace Luke (陸學森) has resigned amid chronic losses and probes into the company’s alleged involvement in subsidy fraud. The board of directors nominated Reuntex Group (潤泰集團) general counsel Tamon Tseng (曾夢達) as the company’s new chairman, Gogoro said in a statement. Ruentex is Gogoro’s biggest stakeholder. Gogoro Taiwan general manager Henry Chiang (姜家煒) is to serve as acting CEO during the interim period, the statement said. Luke’s departure came as a bombshell yesterday. As a company founder, he has played a key role in pushing for the
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
EUROPE ON HOLD: Among a flurry of announcements, Intel said it would postpone new factories in Germany and Poland, but remains committed to its US expansion Intel Corp chief executive officer Pat Gelsinger has landed Amazon.com Inc’s Amazon Web Services (AWS) as a customer for the company’s manufacturing business, potentially bringing work to new plants under construction in the US and boosting his efforts to turn around the embattled chipmaker. Intel and AWS are to coinvest in a custom semiconductor for artificial intelligence computing — what is known as a fabric chip — in a “multiyear, multibillion-dollar framework,” Intel said in a statement on Monday. The work would rely on Intel’s 18A process, an advanced chipmaking technology. Intel shares rose more than 8 percent in late trading after the
GLOBAL ECONOMY: Policymakers have a choice of a small 25 basis-point cut or a bold cut of 50 basis points, which would help the labor market, but might reignite inflation The US Federal Reserve is gearing up to announce its first interest rate cut in more than four years on Wednesday, with policymakers expected to debate how big a move to make less than two months before the US presidential election. Senior officials at the US central bank including Fed Chairman Jerome Powell have in recent weeks indicated that a rate cut is coming this month, as inflation eases toward the bank’s long-term target of two percent, and the labor market continues to cool. The Fed, which has a dual mandate from the US Congress to act independently to ensure