The Real Deal New York

Chinese banks lending to HNA Group again

Debt-laden conglomerate made up $2B cash shortfall in Q1
March 26, 2018 09:40AM

From left: 1180 Sixth Avenue, Chen Feng and 245 Park

HNA Group navigated choppy waters during the first quarter of the year, making it through a cash shortfall of more than $2 billion.

The conglomerate’s biggest lifeline came from Chinese banks, which resumed lending to the company in February. Its bonds rallied and last week the company settled about $475 million in outstanding fuel bills.

“The cash is flowing again,” one person familiar with the company told the FT.

But while the debt-laden Chinese conglomerate was bolstered by $4.6 billion in recent asset sales, HNA has relied on initial public offerings and secondary offerings to steady its balance sheet as it’s struggled to find buyers to match its spending spree over the past four years, the Financial Times reported.

“There’s no big buyer stepping up. If there’s someone lurking out there they aren’t going to put their head above the parapet,” said Fraser Howie, co-author of Red Capitalism. “You go to the public markets now because it’s the last resort.”

The company also has two IPOs in the pipeline, the first of which could raise $1.06 billion.

HNA has roughly $4 billion worth of real estate up for sale, including 245 Park Avenue, which it bought last year for $2.21 billion. Any buyer would have to spend hundreds of millions to upgrade the 1960s-era tower.

The company has roughly $4 billion worth of real estate up for sale, including 245 Park Avenue, which it bought last year for $2.21 billion. [FT]Rich Bockmann