December 6, 2017 / 7:15 AM / 10 days ago

China's HNA Group to sell overseas property, dispose non-core assets: 21st Century Business Herald

BEIJING (Reuters) - HNA Group Co Ltd’s [HNAIRC.UL] Chief Executive Officer Adam Tan said the aviation-to-financial services conglomerate is negotiating to sell overseas real estate as part of a strategic streamlining, according to an interview published by 21st Century Business Herald.

HNA also is looking to set-up investment funds to help sell the properties in New York, Sydney and Hong Kong to outside investors, Tan said.

“HNA is a rational investor,” Tan told the mainland China media outlet, adding the company will sell and not just buy assets.

HNA has “cleared” more than 100 small companies this year that weren’t key to the firm’s core business, Tan said, and has slowed the pace of its outbound investment since last November.

Tan’s remarks come as HNA, which inked deals of $50 billion over two years, including stakes in Hilton Worldwide Holdings Inc (HLT.N) and Deutsche Bank AG (DBKGn.DE), faces increased scrutiny from regulators and bankers due to announced changes to its shareholding structure and its use of leverage.

Last week, S&P Global Ratings downgraded HNA’s credit profile by one notch to ‘b’, five notches below investment grade, citing the group’s “aggressive financial policy” and tightening liquidity amid looming debt maturities.

HNA’s financing woes continued this week, with a report that airlines owned by the Chinese conglomerate have missed some payments due on leased aircraft, Fred Browne, CEO of aviation lessor Aergo Capital Ltd, told industry publication FlightGlobal.

Tan told 21st Century Business Herald that HNA’s access to credit remained sound. Domestic banks had a combined credit line of more than 800 billion yuan ($120.96 billion) with HNA at the end of November, Tan said, and nearly 300 billion yuan of credit lines were unused.

    The company in a separate filing earlier this year said that it had used 454.5 billion yuan of its 745.2 billion yuan total credit lines as of the end of June.

    Last month, HNA announced that Shanxi Rural Credit Cooperative opened credit line of 10 billion yuan to HNA, mainly to support financing of the aviation tourism industry in Shanxi Province.

    HNA is facing a regulatory investigations in Europe, following the July announcement by the conglomerate that named key executives as shareholders.

    The Swiss Takeover Board said last month HNA gave partially untrue or incomplete information during the takeover of Swiss airline catering firm Gategroup, which the conglomerate bought for $1.5 billion last year.

    The regulator said the group had failed to disclose that company executives held controlling stakes in the conglomerate.

    Reporting by Matthew Miller; Editing by Christopher Cushing

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