Wed, Apr 24, 2019 - Page 10 News List

HNA unit missed payment, assets seized by lenders

Bloomberg

Lenders to HNA Group Co’s (海航集團) CWT International Ltd (海航國際) seized control of assets in China and the US after the unit failed to repay amounts due on its credit facility.

Assets that are being taken over include shareholdings of CWT Pte, with investment properties in the US and golf courses in China, according to a statement.

Lenders had threatened to take control of the assets unless CWT made payments by 9am on Wednesday last week tied to a HK$1.4 billion (US$178 million) loan taken out in September last year.

Operations of CWT Pte are continuing as usual and trading in CWT International shares are to remain suspended, according to the statement.

That setback for HNA suggests that the Chinese conglomerate is still struggling to cope with its debt after embarking on more than US$25 billion of asset sales since last year, unwinding one of the biggest global acquisition binges in the nation’s history.

CWT Pte last week it had redeemed in full its S$100 million (US$74 million) 3.9 percent notes due on Thursday last week.

Chinese companies — including HNA, Anbang Insurance Group Co (安邦保險集團) and Dalian Wanda Group Co (萬達集團) — have been unloading assets in recent years after attracting government scrutiny because of the financial risks associated with their debt-fueled expansions.

HNA’s asset sales alone have exceeded US$20 billion since last year, while the founder of Anbang — a firm temporarily seized by the government last year — is now serving jail time.

Besides the crackdown on the big conglomerates, China’s capital controls are limiting individuals’ spending on global real estate as the government tries to guard against any large and destabilizing exodus of cash from the economy.

Parties tied to HNA recently sold a site with two historical homes in Hong Kong’s prestigious Peak area at a loss for HK$550 million, the Hong Kong Economic Times reported earlier this month, citing unidentified people.

HNA has also been shedding assets in the US.

In January, the conglomerate sold 850 Third Avenue, a midtown Manhattan office building near Trump Tower, in a US$422 million transaction that resulted in a loss for HNA.

Separately, it has been searching for a buyer for its stake in neighboring 245 Park Avenue, a skyscraper it bought in 2017 for a near-record US$2.21 billion.

SL Green Realty Corp said late last year that it would take over operations of that property.

Last year, HNA agreed to sell office towers in Minneapolis and San Francisco and the global hotel chain Radisson.

It also disposed of its stakes in Hilton Worldwide Holdings Inc and two Hilton spinoffs.

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