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HNA restructuring moves ahead with $5.7bn airline funding
Bankrupt Chinese conglomerate HNA Group moved a step forward in its restructuring process on Monday with a plan to inject fresh capital into its core airline subsidiary.
Investors in Hainan Airlines Holding agreed to a plan to double the capital base and allot new shares to a designated strategic investor and a certain group of creditors who will be compensated in stock, according to an announcement. The bankruptcy administrators, appointed by the People's High Court of Hainan Province, have selected Liaoning Fangda Group, an industrial conglomerate with operations in carbon, steel, medicine and retail. The announcement comes just days after debt-laden HNA Group, a once-aggressive buyer of foreign assets that became one of China's most high-profile corporate bankruptcy cases, said its chairman and CEO had been taken away by Chinese police on suspicion of unspecified crimes.
A total of 16.43 billion new Hainan Airlines shares will be issued, expanding the total number of shares to 33.24 billion. The offer price was not disclosed, but based on last Friday's closing price of 2.25 yuan on the Shanghai Stock Exchange, the new issuance will be worth around 37 billion yuan ($5.72 billion). Trading in the airline's shares was suspended on Monday and is expected to resume on Tuesday. Among the new shares, no less than 4.4 billion shares will be allocated to the strategic investor, while the rest will be used to repay part of the debt. This marks a small but significant step in the bankruptcy proceeding of HNA Group, which was first filed in January.
However, the creditors' vote on a bigger restructuring plan to merge 11 airline-related companies into a single new unit was postponed until Oct 20. Hainan Airlines' board said in a statement that the delay was due to allowing more time for certain creditors to make their final decision. The plan, which was disclosed by Hainan Airlines on Monday evening, proposes to combine Hainan Airlines with 10 other affiliates, including seven other carriers, namely Urumqi Air, Fuzhou Airlines, China Xinhua Airlines, Shanxi Airlines, Lucky Air, Air Changan, and Guangxi Beibu Gulf Airlines. According to the disclosure, the 11 entities owe a total of 397.2 billion yuan to 4,915 creditors. Their assets add up to only 4.58 billion yuan, while the total liquidation value, not including leases and other intangible assets, was 40.95 billion yuan -- far short of their total liabilities. Certain claims will be prioritized, including employees' wages and various taxes, which are stipulated to be paid in full by cash. Smaller creditors of less than 100,000 yuan will be compensated in full as well.
Creditors will be protected to the extent of the market value of their collateral, but the remaining portion with interest will be repaid in a 10-year installment plan. The interest payments are to be made twice a year starting from June 20, 2022, while reimbursement of the principal begins on Dec. 20, 2023. The annual repayment of principal starts small from 2% of the total principal, but it is set to gradually increase to 20% in the last two years of the installments. HNA Group was once among China's most acquisitive conglomerates, buying up assets such as the Radisson hotel chain, aviation services company Swissport Group and stakes in Deutsche Bank and airlines and airports, in countries as far flung as Brazil, Australia, Ghana, Turkey and South Africa. The rapid expansion with heavy reliance on leverage led to a crash crunch, which surfaced in 2017. The Hainan court ruled in mid-March to consolidate the bankruptcy restructuring procedures by virtually merging the parent HNA Group with 320 of its affiliates. The decision to treat them as a single organization followed the court's assessment that the group's management was "highly mixed up" and "chaotic," claiming companies were independent in name only.
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https://asia.nikkei.com/Business/Markets/China-debt-crunch/HNA-restructuring-moves-ahead-with-5.7bn-airline-funding
Today, the U.S. Department of the Treasury announced Alison Doone as the new Acting Director of the U.S. Mint. Doone previously served as Chief Administrative Officer at the Mint. Doone’s first day as Acting Director will be on October 1
>Doone, a member of the Senior Executive Service since 2004
has served as the Mint’s Chief Administrative Officer since March 2021.
https://home.treasury.gov/news/press-releases/jy0373