Facing Lawsuits And Debt, China’s HNA Group Reassures Creditors Via WeChat Post

Chinese aviation and shipping conglomerate HNA Group, which is facing questions over rising debt levels, and lawsuits over foreign investments, today tried to reassure creditors via social media.

In a post on its official WeChat account, HNA said that eight leading Chinese banks had visited its headquarters in Hainan Province and in a meeting "agreed to continue supporting HNA." The post went on to say that "HNA Group has obtained a total credit lines of RMB800 billion (US$121 billion) from various financial institutions, with RMB310 billion (US$46.89 billion) of unused credit lines."

China Development Bank, The Export-import Bank of China, Bank of China, Agricultural Bank of China, Industrial and Commercial Bank of China, China Construction Bank, Bank of Communications and Shanghai Pudong Development Bank attended the meeting, according to HNA.

The news comes a day after news broke that U.S. software company Ness Technologies is suing HNA Group affiliate Pactera Technology International Ltd., in relation to a failed US$325 million takeover transaction. According to a CFIUS prefiling document Pactera allegedly failed to meet the demands of the Committee on Foreign Investment in the United States (CFIUS) with "reasonable best efforts", causing the transaction to fail.

Since President Trump took office, the CFIUS has tightened the review process of foreign acquisitions of technology companies in the U.S.

The lawsuit is the latest legal issue related to HNA’s US$50 billion global shopping spree that began in 2016. Last month, the Swiss Takeover Board ruled that HNA provided some false information in its US$1.5 billion takeover of Zurich-based Gategroup Holding AG. The firm also participates in a pending deal to acquire 45% stake of former White House Communication Director Anthony Scaramucci’s hedge fund SkyBridge Capital for US$180 million. In its lawsuit, Ness Technologies alleges that the HNA Group is going through a similar process with CFIUS for its acquisition of SkyBridge Capital.

In a press release issued Wednesday evening, HNA claimed that Ness Technologies’ allegations are "baseless."

HNA’s acquisition binge has also led to increased regulatory scrutiny at home as the Chinese government has sought to slow capital outflows by cracking down on what it deemed unsound foreign investments. As a result, in recent weeks, yields on HNA’s corporate bonds have risen to record levels amid concerns over the company’s liquidity position, while both S&P Global Ratings and Fitch Ratings have voiced concerns about at least four companies because of their ties with HNA.

 
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