Ailing Chinese airline group offers to pay 40% of its debts



BEIJING (AP) – HNA Group, a Chinese airline operator that has struggled financially after a wave of global acquisitions, has proposed a plan to settle $ 61 billion in debts owed to thousands of creditors by paying 40% of the total.

The conglomerate warned in a statement Tuesday that it risked liquidation due to “mismanagement and investment trouble.” The HNA Group said on Friday that its chief executive officer had been arrested by police on suspicion of unspecified crimes.

The HNA Group, which operates Hainan Airlines and other carriers, purchased hotels, a stake in Deutschebank AG and other overseas assets from 2014, funded by bank loans and bond sales. The company was struggling to pay its debts when the closure of global travel last year to fight the coronavirus devastated its aviation business. The government of the southern province of Hainan took control in February 2020.

The repayment plan, released on Tuesday by HNA’s publicly traded Hainan Airlines Holding Co., says an administrator has asked a court to confirm that the company is obligated to pay 161.2 billion yuan (25 billion dollars), or about 40% of the 397.2 billion yuan ($ 61 billion) claimed by 4,915 creditors.

Creditors would receive Hainan Airlines shares and no more than 100,000 yuan ($ 15,500) in cash to settle one-third of the debt, according to the plan. He said the HNA Group and related companies would be responsible for two-thirds of the remaining debt.

The HNA Group said on Friday that its chairman, Chen Feng, and its CEO, Tan Xiangdong, had been “taken under compulsory measures” by the police on “suspicion of crime”. He gave no details but said operations “are not affected”.

HNA first gained attention in Washington in 2017 when it agreed to buy a hedge fund from Anthony Scaramucci, who was scheduled to serve in the White House as President Donald Trump’s Wall Street liaison. The two sides canceled the deal in 2018.


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