Business Irish

Friday 18 January 2019

Avolon helps prop up debt-laden HNA Group in share sale


Avolon boss Domhnal Slattery. Photo: Jason Clarke
Avolon boss Domhnal Slattery. Photo: Jason Clarke

Prudence Ho, Steven Arons and Nick Comfort

Avolon's direct parent company, Bohai Capital, plans to issue shares to fund a revamp of the aircraft lessor's ultimate parent, the HNA Group.

The money will be used to buy assets from another HNA subsidiary as part of an overhaul at the debt-laden Chinese conglomerate.

Bohai Capital plans to buy a stake in an unnamed trust company and some financial assets from HNA Group and related parties, according to a filing to the Shenzhen stock exchange.

Bohai's stock is currently suspended from trading.

It didn't explain the rationale behind the deal and said its stock will remain suspended from trading.

Despite the lack of details, Warut Promboon, managing partner at credit research firm Bondcritic, said the move appears to be designed to deploy liquidity where it is needed within the group.

The deal essentially means that Irish-founded, Irish-run Avolon is helping to prop up its debt-laden ultimate parent.

Seven HNA units have been suspended from trading - all but one were halted in January - pending an overhaul of the group.

The once little-known airline operator has been facing mounting debt pressures in recent months after it spent tens of billions of dollars to snap up assets such as stakes in Hilton Worldwide Holdings and Deutsche Bank.

On Friday HNA reduced its stake in the German lender slightly while pledging to remain a "significant" holder as it reorganises the financing of the stake.

HNA held 9.2pc of voting rights in Deutsche Bank, according to a regulatory filing on Friday, down from 9.9pc previously. "HNA will continue to be a significant investor in Deutsche Bank," a spokesman for C-Quadrat Asset Management, which oversees the investment for HNA, said.

"It is possible that voting right thresholds will be temporarily crossed" as HNA works on a "long-term-oriented financing structure" for the stake, he added.


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