Sep 13, 2018 (China Knowledge) - Chinese conglomerate HNA group has defaulted on RMB 300 million loan and the lender is now seeking to freeze its assets. The default has come despite the group’s sale of USD 18 billion worth of assets in order to finance its debt.
Last month, the group had also begun to miss payments to individual investor in peer-to-peer products it had issued and also nearly defaulted on RMB 1 billion bond.
The loan which was raised by Hunan Trust Co Ltd through various trust products matured on September 10 with HNA failing to pay it back. Communication attempts with HNA have also been unsuccessful.
HNA which started out as a regional airline in Hainan, China which turned into a conglomerate went on a debt-fueled USD 40 billion buying spree across the globe, buying various businesses and stakes in companies back in 2015 to 2017. Some of its acquisitions include California-based tech firm Ingram Micro, Swiss cargo handler Swissport and hotel group Hilton Worldwide.
These acquisitions have put significant pressure on the company’s finances. Over the past year, the group has come under pressure from Beijing to divest from some of its assets due to growing concerns about high corporate debt levels and large capital outflows.
HNA will continue to divest from its assets, including a 7.6% stake in Germany’s Deutsche Bank. This will be done over the next 18 months. While HNA has managed to sell most of its assets at a profit, the group will likely make a loss on its Deutsche Bank stake.
The plan for the group initially was to reduce its assets by a third to around RMB 800 million from RMB 1.1 trillion.
As of the end of June, HNA’s total debt stood at RMB 657.4 billion.
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