Hainan Airlines, a key subsidiary of debt-laden Chinese conglomerate HNA Group, said on Tuesday that it is mulling the purchase of major hotel and aviation assets from its parent, and independent third parties, including several domestic airlines and an unnamed overseas hotel operator.
The company, whose shares have been suspended from trading on the Shanghai bourse since January 10 citing major asset restructuring plans, said that it expects to see trading resume no later than June 9, after requesting an extension from an earlier trade resumption deadline on April 10.
The company said it plans to purchase a number of major assets from its parent HNA Group, including “an overseas hotel operator”, which mainly engages with the hotel management business and has “an important overseas listed subsidiary”.
The subsidiary will use a combination of cash and funds raised through the issuance of new shares to finance the asset purchases.
Meanwhile, Hainan Airlines also announced it will purchase Chongqing-based West Air, Air Guilin Company, and HNA Hospitality Group. It will also purchase Hainan Sky Plumage Flight Training, in addition to maintenance, repair and overhaul service providers HNA Technic, and SR Technics from its parent or independent third parties.
Overseas assets would account for 48 to 65 per cent of all outlays involved in this overhaul, said Hainan Airlines, adding that it would need to consult and discuss with multiple overseas regulators. Owing to delays in receiving the regulatory approvals, the company has applied to extend the suspension of trading on it s shares to no later than June 9.
The restructuring comes after HNA rose to international prominence following a global buying spree that saw it build up holdings of strategic assets. These include hotel group Hilton Worldwide Holdings, airline catering giant Gategroup, aviation servicing company Swissport, and a large shareholding in Deutsche Bank, among others. The company resorted to loans to fund the asset purchases, resulting in a high gearing ratio.
Hainan Airlines, founded in 1993, has yuan-denominated A shares and hard-currency B shares listed on the Shanghai exchange. The company counts US billionaire George Soros among its early investors. Hainan Airlines has a fleet of more than 300 aircraft and serves about 1,400 domestic and international routes.
Shares of HNA Infrastructure, a Hong Kong listed HNA unit, closed 11.42 per cent lower on Tuesday, reversing from sharp gains in the previous two sessions.