Tuesday 25 June 2019

Avolon parent Bohai sees shares plummet

Irish-founded Avolon is the world's third-largest aircraft leasing firm. Stock image
Irish-founded Avolon is the world's third-largest aircraft leasing firm. Stock image

Prudence Ho and Cathy Chan

Shares in Bohai Capital, the HNA Group subsidiary that owns Irish aircraft lessor Avolon, fell by the 10pc daily limit in Shenzhen yesterday after it became the first of the Chinese group's seven suspended units to resume trading.

Bohai Capital, which had been suspended from trading since mid-January, tumbled to 5.26 yuan (60c) as soon as trading began, heading for its lowest close in almost four years.

The stock has room to fall further as the Shenzhen Composite Index had fallen 17pc while shares of Bohai were halted.

The tumble bodes ill for HNA's remaining six halted units, five of which HNA suspended in January as the volume of news about HNA's liquidity challenges was peaking.

The HNA units cited major restructurings for the suspensions, though analysts have pointed out there may be other motives given that Chinese companies have a history of using trading halts to prevent their stocks from falling further.

Hainan Airlines is among the other HNA entities which is halted from trading.

Last week it emerged that private equity firm RRJ Capital has invested about $1.3bn in entities part-owned by HNA Group, including Avolon, according to a person with knowledge of the matter.

RRJ purchased preference shares convertible into minority stakes in two HNA-linked special purpose vehicles (SPVs) earlier this year, the person said, asking not to be identified because the information is confidential. One SPV owns Avolon while the other holds networking and software distributor Ingram Micro, the person said. RRJ is seeking to capitalise on heavily-indebted HNA's efforts to restructure. (Bloomberg)

Irish Independent

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