HNA seeks help from Hainan government as coronavirus outbreak imperils highly leveraged group’s debt workout

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A working committee led by the Hainan government, comprising representatives of the civil aviation administrator and China Development Bank, will take over the management of risks at HNA, the company said

The committee will be led by Gu Gang, who also heads the provincial authority’s development unit, HNA said.

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Yujing LiuandPeggy Sito

Published: 4:46pm, 29 Feb 2020Updated: 10:48pm, 29 Feb 2020

HNA Group, one of the biggest asset acquirers to emerge from China in the past decade, has sought the help of the Hainan provincial authorities to manage its liquidity, as the country’s coronavirus outbreak deterred travelling and imperilled the company’s debt workout plan.

HNA’s liquidity will be managed by a working committee comprising representatives from the Hainan government units, the country’s civil aviation administrator and China Development Bank, according to the company’s statement released on Saturday.

The board of directors of the Haikou-based conglomerate was reconstituted to make way for two new members. Gu Gang, chairman of state-owned Hainan Development Holdings, was appointed executive chairman of HNA, while Ren Qinghua, director of the Hainan Yangpu Economic Development Zone, was appointed co-chief executive. Co-founder Chen Feng would stay on as chairman, while Adam Tan Xiangdong continues as chief executive alongside Ren, HNA said.

The weekend reshuffle comes as HNA Group, which owns Hainan Airlines and Hong Kong Airlines among its myriad assets from aviation to hotels, banking and real estate, has come under intense pressure to repay debt that ran to US$108 billion at its 2018 peak. The Haikou-based conglomerate, more than a year into an assets disposal programme, said its debt impairment plan has been imperilled by “increasing liquidity risk” because of the current coronavirus outbreak.

HNA Group grew out of Hainan Airlines, which began in 1989 as a regional carrier flying between the provincial capital of Haikou and mainland China. The airline operates a fleet of 660 planes in two carrier units and aircraft leasing company serving more than 1,400 routes.