VIENNA (Reuters) - Chinese conglomerate HNA, under scrutiny at home and abroad over a debt-fueled acquisition spree, gave partially untrue or incomplete information during the takeover of Swiss airline catering firm Gategroup last year, the Swiss Takeover Board said.
In a statement late on Friday, the regulator said the aviation and shipping group had failed to disclose that company executives held controlling stakes in the conglomerate and also gave incorrect shareholdings for the top two stakeholders - Bharat Bhise and Guan Jun - in the Gategroup offer prospectus.
HNA said in a statement that it had provided all necessary information and the Gateway deal would not be affected.
HNA’s all-cash $1.5 billion deal for Gategroup was part of a $50 billion buying binge over two years that included stakes in Hilton Worldwide Holdings Inc (HLT.N) and Deutsche Bank (DBKGn.DE). Bankers have since voiced concern about HNA’s leverage levels and ownership structure..
The Swiss regulator said Bhise and Guan had acted as trustees holding shares for HNA co-chairmen Chen Feng and Wang Jian, Chief Executive Adam Tan and three other people, and they should have been listed as beneficial owners in the offer prospectus.
“Chen Feng, Wang Jian, Tan Xiangdong, Li Xianhua, Li Qing as well as Chen Wenli should have been disclosed as a group controlling HNA Group Co, Ltd and thus indirectly also controlling HNA Aviation (Hong Kong) Air Catering Holding Co in the offer prospectus of 20 May 2016,” the Swiss Takeover Board said.
HNA said in a statement that it “fully cooperated with the Swiss Takeover Board and provided the necessary information. HNA acknowledges the Swiss Takeover Board’s determination on the subject.”
“The decision ... does not have any impact on the validity of the takeover of Gategroup as such, which has been successfully completed. This ruling addresses a very specific event in May 2016 in Switzerland which is naturally not being investigated in any other jurisdiction,” HNA said.
The regulator has asked consultant group Ernst & Young AG to look into whether the controlling group complied with minimum price rules and best price regulations in the deal. HNA also has to pay a fee of 50,000 Swiss francs ($51,000).
The Takeover Board also said that stakes in HNA Group held by Bhisé and Guan amounted to 17.15 percent and 12.01 percent, respectively, and not – as specified in the offer prospectus of May 20, 2016 – 17.40 percent and 12.35 percent.
HNA shook up its ownership structure in July by transferring the near 30 percent stake held by the two men to a newly formed charity in New York.
Headquartered in the southern Chinese island of Hainan, privately owned HNA has fielded many questions about its shareholding structure this year after Guo Wengui, a fugitive Chinese billionaire, alleged that “officials in China’s Communist Party and their relatives were undisclosed shareholders” in the group.
Guo also alleged that HNA had allowed Chinese government officials and their relatives to use its aircraft “for purely personal reasons.”
HNA has denied Guo’s allegations and has sued for defamation.
($1 = 0.9796 Swiss francs)
(Corrects to remove incorrect stock code for the HNA conglomerate and to say fee, not fine in para 9)
Reporting by Shadia Nasralla and John Miller; Editing by Dale Hudson and Leslie Adler