Corporate Debt Restructuring Masterclass

18 July 2022 (Mon), 5pm Singapore/HK time

HNA Group announced plans to recoup at least CNY 112bn ($17bn) of misappropriated funds, undisclosed debt guarantees and questionable investments from its major shareholders and affiliates, as per Bloomberg. The embezzlement had come to light earlier this month after a local government led probe. As per an exchange filing, HNA’s flagship Hainan Airlines Holding Co. will ask its parent to repay part of its debt while two other group units are trimming the stake held by its controlling shareholders. Hainan Airlines will transfer at least CNY 72.5bn ($11.2bn) worth of interest bearing debt to HNA and HNA Aviation Group, holding them responsible for the misuse. Other group firms involved in the scandal, HNA Infrastructure Investment Group Co. and CCOOP Group Co. will convert a part of their capital reserves into new shares and then ask the controlling shareholders and their related firms to surrender these shares.

As part of the group’s restructuring plan, a state-backed company is said to become a strategic investor in HNA, after it has sold off non-core assets, and creditors will be allowed to swap their debt for equity in the new trimmed-down version of the group or gain a stake in the trust managing the divestment of the other assets, depending on their lender status, as per people familiar with the matter. HNA’s 6.25% bonds due in October are currently trading at 56 cents on the dollar.

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