Three listed companies of HNA Group disclosed that a total of 61.5 billion yuan ($9.57 billion) had been embezzled by shareholders and other related parties, as the troubled Chinese conglomerate undergoes bankruptcy restructuring.
The three units, Shanghai-listed Hainan Airlines Holding Co, HNA Infrastructure Investment Group Co and Shenzhen-listed CCOOP Group Co, did not reveal the identities of the shareholders. The companies had also provided guarantees for 46.5 billion yuan in financing in a noncompliant manner along with their subsidiaries, according to Reuters citing disclosures to stock exchanges.
HNA Group, which owns one of China’s largest passenger carriers, Hainan Airlines, said in a statement on Friday that its creditors had filed a petition with the Hainan Province High People’s Court for the group’s bankruptcy and reorganization “as it could not pay off due debts.” HNA said it will cooperate with the court’s review, push forward with the debt restructuring and protect the legitimate rights of creditors.
Haikou-based HNA previously entered an aggressive purchasing phase with global acquisitions fueled by debt, including a stake in Hilton hotel group and Deutsche Bank, as well as investments in real estate and finance. By the end of 2017, HNA’s assets topped 1.2 trillion yuan ($186 billion).
Starting in 2017, HNA has sold much of its assets after a government crackdown and a liquidity crisis, including airport services company Swissport and electronics distributors Ingram Micro. At the same time, the group’s core aviation and tourism businesses were hit hard during the coronavirus pandemic and it sought the help of the Hainan provincial government in February last year.
The working team sent by the government to try to resolve HNA’s liquidity risks expects that 400 to 500 HNA-linked companies to go into bankruptcy restructuring, Caixin reported, citing insider sources. It added that HNA owns more than 2,300 companies.
The company had 706.7 billion yuan ($109 billion) of debts at the end of June 2019, the last financial report it made public. Its total assets were worth 980 billion yuan ($152 billion). State-backed China Development Bank is HNA’s largest creditor.