HNA asks China's Hainan govt for help as coronavirus lifts liquidity risks (updated)
29/02/2020 09:54
(Adds background, details)
By Gabriel Crossley and Zoey Zhang
BEIJING, Feb 29 (Reuters) - HNA Group HNAIRC.UL has asked
the government of China's province of Hainan to lead a work
group dedicated to resolving its increasing liquidity risks
after a slowdown in business caused by the coronavirus outbreak.
HNA Group is not able to thoroughly deal with liquidity
risks itself, the company said in a post on its official WeChat
account on Saturday.
HNA directly owns or holds stakes in a number of local
Chinese carriers, including Hainan Airlines 600221.SS , and is
among many companies pressured by the coronavirus outbreak that
has forced widespread flight cancellations.
The work group is being led by Gu Gang, chairman of Hainan
Development Holdings Co., an investment arm of the government of
the southern province, the WeChat post said.
Officials from the Hainan Yangpu Economic Development Zone,
the Civil Aviation Administration of China's Central and
Southern Regional Administration and China Development Bank are
also involved in the work team, HNA said.
There have been news reports that the Chinese government may
take over HNA and sell off its airline assets because the
coronavirus outbreak has reduced the conglomerate's ability to
meet its financial obligations. urn:newsml:reuters.com:*:nL4N2AJ3QV
State carriers Air China 0753.HK 601111.SS and China
Eastern Airlines 0670.HK 600115.SS are prepared to hold
talks about HNA's assets, a source with direct knowledge of the
matter said on Feb. 20. urn:newsml:reuters.com:*:nL4N2AK377
HNA Group was once one of China's most aggressive dealmaking
firms, having spent $50 billion on global acquisition spree that
once spread from Deutsche Bank DBKGn.DE to Hilton Worldwide.
However, it began unwinding those purchases two years ago to
shift focus to its airlines and tourism businesses, after
drawing scrutiny from Beijing and other overseas regulators.
In December, before the coronavirus epidemic hit China, HNA
Chairman Chen Feng admitted that the firm had faced cash flow
shortages that forced it to delay some salary payments in 2019,
but vowed to resolve its liquidity risks this year. urn:newsml:reuters.com:*:nL4N29515F
Since the outbreak, Hainan Airlines and other airlines have
tried to cut their losses by putting foreign pilots on unpaid
leave, but they still need to refund millions of passengers and
face plummeting demand.
In a separate statement on Saturday, HNA Group also said it
will add two more seats to its existing five member board of
directors, with Hainan Development's Gu becoming its executive
chairman. Co-founder Chen Feng will remain the board's chairman.
Ren Qinghua, director of the Administrative Committee of
Yangpu Economic Development Zone, was also appointed to the
board and will become co-CEO alongside Tan Xiangdong, HNA
Group's existing CEO, it said.
(Reporting by Gabriel Crossley and Zoey Zhang; Additional
reporting by Brenda Goh; Editing by Clarence Fernandez and
Christian Schmollinger)
((Gabriel.Crossley@thomsonreuters.com; +86 10 5669 2127;))