This report shows HNA Group widening its search for help as it tries to unwind assets under heavy debt pressure and tighter scrutiny from Beijing and Washington.
People familiar with the matter said the Chinese conglomerate had approached state-owned China Cinda Asset Management Co, one of the country’s biggest bad debt managers, for guidance on disposals. HNA vice president Dennis Chen, who is the nephew of chairman Chen Feng, met Cinda President Chen Xiaozhou on Tuesday to discuss possible cooperation.
The exact role Cinda may play was not immediately clear. But an internal memo sent to HNA staff and reviewed by Reuters said Cinda had told the company it was ready to help. In that memo, Cinda’s president said: “Cinda will continue to support HNA’s strategic transformation and its asset disposals in core and auxiliary businesses,” and added: “Especially when HNA is in a relatively difficult time, there is all the more reason for us to increase our support.”
HNA has spent years under scrutiny for roughly $50 billion in deals, including hotel purchases in the United States, and for becoming the largest shareholder in Deutsche Bank. The airlines-to-finance group has been selling assets as debts mount and China tightens its stance on aggressive dealmakers. Its disposals have included real estate, stakes in hotel groups, and the much-publicized luxury corporate jet known as the Dream Jet, which was valued at more than $300 million.
This week, HNA-controlled Hainan Airlines announced it had sold a 40 percent stake in Urumqi Air to a local government entity, though the price was not disclosed. The group also sold a 25 percent holding in asset manager BrightSphere, worth about $343 million, to U.S. hedge fund manager John Paulson.
Chairman Chen told the domestic business magazine Caijing last week that HNA had already sold almost 300 billion yuan, or about $43 billion, in assets this year and would keep going.
Ingram Micro sale remains sensitive ¶
Cinda has already been involved in discussions with possible buyers for Ingram Micro, the U.S. IT parts distributor HNA bought for $6 billion in 2016. One source said the bad debt manager could also supply capital for a potential transaction.
An HNA spokesman declined to comment on the meeting with Cinda, but said neither HNA nor any affiliate or subsidiary was working with Cinda to sell Ingram Micro. He said “any suggestion to the contrary is patently false”. Cinda did not respond to requests for comment, and Ingram did not respond outside office hours.
Any sale of Ingram Micro could be complicated by the Committee on Foreign Investment in the United States, which has recently been given broader powers to review foreign acquisitions. When the HNA-Ingram deal was approved in 2016, CFIUS required the U.S. company to operate as a stand-alone business.
Earlier this month, new rules designed to curb Chinese investment in 27 sensitive sectors gave the committee additional oversight over areas including telecommunications and semiconductors.
Reuters reported in May that several Chinese groups, including Cinda’s counterpart China Huarong Asset Management, had discussed Ingram with HNA. Huarong later ended those talks over concerns about whether U.S. regulatory approval could be secured.
HNA Technology Co, which owns Ingram, said in September that it had $3.55 billion in debt outstanding from the purchase, including $350 million due this year.
The report was filed from Hong Kong with additional reporting from Beijing.
