HNA Group Co. Ltd. is looking to sell 100 billion yuan of assets within the first half of 2018 as it looks to reduce its debt to improve liquidity, Bloomberg News reported, citing people familiar with discussions between the company and creditors.
The debt-laden conglomerate is yet to provide information on the assets it will sell, but it is said that the company took its first step with the confirmed sale of its Sydney One York Office Building in Australia for A$205 million, reportedly to Blackstone Group LP. The sources also said 80% of the divestment will be carried in the second quarter.
The sellout also extends outside real estate — a market where HNA is believed to be trimming its exposure to by US$6 billion — with a subsidiary of the conglomerate recently signing a deal for the sale of its stake in a U.S. shipping company, the news agency noted.
As of June 30, 2017, HNA had short-term debt amounting to 185.2 billion yuan. Despite the proceeds from the possible divestments, HNA will still need 15 billion yuan to cover the 65 billion yuan debt that will mature during the first quarter of 2018, according to the Jan. 31 report. Bloomberg and Real Capital Analytics data puts HNA's total assets to US$190 billion, more than US$14 billion of which are real estate properties.
Aside from debt, China's capital control measures were also identified as a reason for the company's offshore investment exit. HNA CEO Adam Tan confirmed as much in November 2017 when he said the company "will not invest in anything the government does not support."
Representatives of the conglomerate did not respond when asked for a comment regarding the matter, Bloomberg noted.
As of Jan. 31, US$1 was equivalent to 6.29 yuan.
