China's HNA in talks with Hong Kong developer for debt funding: LPC

FILE PHOTO: Illustration photo of the HNA logo December 21, 2017. REUTERS/Thomas White/Illustration/File Photo

HONG KONG (Reuters) - Chinese conglomerate HNA Group is in talks with a leading Hong Kong property developer for a loan to refinance its repayment liabilities linked to a land parcel in the Asian financial hub, people familiar with the matter told Reuters Loan Pricing Corp.

HNA’s exclusive talks with Sun Hung Kai Properties is taking place, as the airline-to-financial conglomerate is facing financial strains and rising financing costs after spending $50 billion over the past two years on acquisitions.

An HNA executive, however, told Reuters in December that the conglomerate was not facing a liquidity crisis and characterized its high-profile investments, such as Deutsche Bank and hotels group Hilton, as successful.

HNA is willing to pay an interest rate of 9 percent per year for the loan from Sun Hung Kai Properties, the people told LPC. The size of the loan was not specified.

The group needs funding to repay bridge loans and finance the development of four plots of land it purchased in Hong Kong’s Kai Tak area, LPC said, adding one of the loan tranches, worth HK$2.5 billion ($320 million), comes due on Monday.

HNA and Sun Hung Kai Properties declined to comment when contacted by LPC.

($1 = 7.8226 Hong Kong dollars)

Reporting by Yan Jiang and Chienmi Wong of Reuters Loan Pricing Corp; Writing by Sumeet Chatterjee, editing by David Evans