Embattled Chinese conglomerate HNA Group is looking for private investors to help it emerge successfully from bankruptcy claims.
Sources with knowledge of the matter said that the company is working to bring in strategic investors to support its restructuring plans.
Analysts said that the company's fight to emerge from bankruptcy will be an uphill battle due to its massive debt and unorganized corporate structure. HNA Group has been placed under a restructuring exercise by the Hainan government, which was forced to step in to address the company's mounting liquidity risks.
HNA acquired its debt pile from years of aggressive asset acquisitions. The owner of Hainan Airlines went on a $50 billion global acquisition spree over the past few years, mainly fueled by debt. Its attempt to create an empire with stakes in several industries, from Hilton Worldwide to Deutsche Bank, halted after it was no longer able to keep up with its debt payments.
According to data compiled by Dealogic, HNA Group currently has outstanding bonds in various currencies worth more than $27.5 billion. The company also has loans worth more than $20 billion.
Sources with knowledge of the company's restructuring plans said that a workgroup established by HNA Group and led by its newly-elected party secretary, Gu Gang, will be actively looking for strategic investors to help in its restructuring.
The same sources said that the group plans to approach private sector investors rather than state-owned ones. The company's restructuring is reportedly being led by law firm King & Wood Mallesons. The bankruptcy restructuring process is expected to be completed within this year, the sources said.
The decision to seek private investors comes as the company's creditors filed for its bankruptcy. News of the filing sent several HNA Group-linked stocks downwards. CCOOP Group, HNA Technology, HNA Innovation, and Bohai Leasing dropped by between 5% and 10% Monday.
Most analysts aren't optimistic about the company's restructuring prospects. Some have said that the company is unlikely to come out of bankruptcy intact; if it ever comes out of it at all.
"We are not optimistic with the credit situation of HNA Group, and reckon the possible result of the restructuring is the sale, spin-off of its core assets, and forced debt-to-equity swaps," analysts at D.E. Institute, a credit outlook think tank, said.
