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Embezzlement of $10 Billion Comes to Light at HNA Group Cos; Creditors Seek Restructuring
February 1, 2021
HNA Group, once China’s most acquisitive companies, saw three of its units report $9.57bn in embezzled funds by shareholders over the weekend. The news came after a local government-led due diligence probe, with the three units in question being Shanghai-listed Hainan Airlines Holding Co, HNA Infrastructure Investment Group Co and Shenzhen-listed CCOOP Group Co. Creditors of the parent have now applied for bankruptcy proceedings and restructuring. China Development Bank (CDB), its largest creditor would chair the creditor’s committee. The identities of the shareholders were not disclosed and the due diligence team expects ~500 companies linked to HNA Group to go into bankruptcy restructuring as per Caixin, citing sources. The three companies and their subsidiaries had also provided non-compliant guarantees for CNY 46.5bn ($7.2bn) in financing. The government of China’s Hainan Island, which effectively took control of HNA last February with the onset of the pandemic, plans to dispose of the group’s non-aviation assets through a trust, said sources. “HNA is being stripped to its bare bones. They are sort of going back to their roots, and the creditors are struggling to find any decent properties they can sell to get back their money” said Andrew Collier, managing director of Orient Capital Research in Hong Kong. HNA had CNY 706.7bn ($109bn) in debt at the end of June 2019, the last bond report it made public that year showed.
HNA had CNY 706.7bn ($109bn) in debt at the end of June 2019, the last bond report it made public that year showed. HNA’s 6.25% 2021s are trading at 56.49 cents on the dollar, down 4.7 cents.
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