HNA Group’s Past, Present, and a Dead-end!

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Source:Mischa @MischaEDM
Reviewer: Bluesky
Translator:ignoreme,newbief(文蟠),TCC幸福堂 (英語組) ,Bluesky

https://spark.adobe.com/page/KF3GBxXccwtSv/

Introduction: From the case of HNA, it can be seen that the Exposé Revolution had a significant impact on the fate of HNA. Miles Kwok’s disclosure of HNA led to the acceleration of HNA’s internal fights and the international community’s questioning and investigation of the HNA’s assets. The global capital market has withdrawn from HNA and will no longer “transfuse blood” to support HNA. HNA will be swept away into the trash can of history. The Kleptocrats are at the end of their ropes.

From the past to the present life of HNA, we can see that the Exposé Revolution had a significant impact on the fate of HNA. Miles Kwok‘s disclosure of HNA stopped the pace of Kleptocrats’ robbing the country by the kleptocrats through HNA and led to the acceleration of HNA’s internal fights. Miles Kwok‘s exposure of HNA has accelerated the international community’s questioning and investigation of HNA’s assets. It peeled off HNA’s undercover as a political and intelligence platform that the CCP has installed in the United States and the West. Since Miles Kwok broke the news, the international capital market has withdrawn from HNA and no longer “transfused blood” to support HNA. The pace of HNA’s acquisitions and mergers has come to a halt. From full expansion to full contraction, HNA’s operating performance has plummeted.

However, even so, HNA still obtained a collective loan from many Chinese banks. On December 2, 2019, HNA Holdings (600211.SH) announced that it had received a syndicated loan of 4 billion yuan. The loan was led by the China Development Bank, with China Exim BankBank of ChinaAgricultural Bank of ChinaIndustrial and Commercial Bank of ChinaConstruction BankBank of Communications and Postal Savings Bank as initial lenders to form a loan syndicate. Each of the eight banks provided 500 million yuan in loans. The term of the loan is three years. Among them, the first two years are the grace period, and the loan interest rate is a fixed interest rate of 4.75%k. On December 13, HNA Holdings applied for a 4 billion loan again. The China Development Bank Hainan Branch mainly provided this loan with a term of one year. The loan was mainly used to repay its existing loans. We can tell that HNA’s performance over the past year has been very poor and these loans will completely ”sink in the sea”.

In 2019, AlibabaTencent, and Baidu, the most influential Chinese companies, were under new leadership, with Wang JianlianZhu XinliLiu Chuanzhi, and other successful entrepreneurs — at least ostensibly legitimate — forced to kneel to the communist dictatorship. For Chen Feng, present President of HNA, he has lost his mind and conscience that he has been sexually abuse females, even young girls. He used Hainan Island as a base to provide the girls or women to other senior officials. He was suspected of defrauding large amounts of financial bills and manipulating the stock market. But he was able to keep himself safe and sound. The fate of HNA and the glory of Chen Feng is a mirror reflecting the fault, the ugliness, and evil of the CCP(Chinese Communist Party). It shows the ferocity, vileness, and shamelessness of the CCP‘s powerful families in stealing and robbing 1.4 billion Chinese. The existence of HNA is a humiliation to all Chinese people and a living example of kleptocrats enslaving and deceiving the people. God’s justice is manifest, and evil can never prevail over good. HNA will be swept away into the trash can of history. The communist party will be exterminated!

The first stage : HNA’s Rapid Growth (1989-2017)

State-owned Enterprise Period

The Establishment of Hainan Airlines
  • Hainan Airlines was founded in October 1989 and invested by the government of Hainan province.
  • Hainan Airlines obtained civil aviation business license in 1991.
  • Hainan Airlines purchased 4 Boeing 737 aircrafts in 1992
  • Hainan Airlines started ferrying passengers in 1993.

Sino-foreign Joint Venture Period

  • Soros’ American Airlines bought 25% shares for $25 million dollars in 1995. The transaction was approved by China’s Ministry of Foreign Trade and Economic Cooperation during Zhu Rongji‘s tenure.
  • Hainan Airlines was listed in B-share in 1997

Founding of the HNA Group

Below is an important process that HNA Group transformed from state-owned assets into private ones.

  • In 1998Hainan HNA Aircraft Maintenance Company (shareholding 14%), Hainan QiXing Industrial Investment Co., Ltd. (shareholding 47%), Hainan XiangYun Industrial Development Co., Ltd. (shareholding 23%), and Finance and Taxation Department of Hainan Province (shareholding 16%) jointly invested CN¥100.8 million to establish Hainan Harbor & Shipping Holding Co., Ltd. which is the predecessor of HNA Group.
  • In 1999, Hainan HNA Aircraft Maintenance Company and Finance and Taxation Department of Hainan Province withdrew from Hainan Harbor & Shipping Holding Co. Their original shares were invested by Hainan QiXing Industrial Investment Co., Ltd. and Hainan XiangYun Industrial Development Co., Ltd. (renamed to Hainan Traffic Administration Holding Co., Ltd.) Registered capital remained to be CN¥$100.8 million. Hainan QiXing holds 70% shares and Hainan XiangYun holds 30%.
  • HNA Group was listed in A-share in 1999.
  • Hainan QiXing Industrial Investment Co., Ltd. transferred its 40% equity to HainanTraffic Administration Holding Co., Ltd. and its 30% to Guangzhou Yuantong Investment Co., Ltd. on September 17, 2001. After the equity transfer was completed, Hainan Traffic Administration Holding holds 70% shares and Guangzhou Yuantong holds 30% shares.
  • Soros Quantum Fund invested USD $ 25 million in HNA Group in October 2005. Since then, after multiple capital increases and equity transfers, as of July 31 2017, Hainan Traffic Administration Holding Co., Ltd. held 70% equity of HNA Group directly as the controlling shareholder. Hainan Province Cihang Charity Foundation was the actual controller of HNA Group, it controlled HNA Group indirectly through Hainan Traffic Administration Holding and Tang Dynasty Development (Yangpu) Co., Ltd.

Equity Analysis

Equity Distribution of HNA Group
  • A report from New York Times in Feb 2017 has decrypted HNA Group. In the report, titled “Trump Aide’s Deal With Chinese Firm Raises Fear of Tangled Interests” by Sharon LaFraniere, Michael Forsythe and Alexandra Stevenson, it mentioned that one major shareholder, Guan Jun, listed his address in a rundown apartment in Beijing, picturing a filthy hallway outside his door, a decaying bed, and a bag of trash hung from its frame. But according to the record, he might indirectly own more than a quarter of the shares of HNA.
  • In April 2017, Guo Wengui (Miles Kwok) exposed that Wang Qishan was the actual owner of HNA Group.
  • Guan Jun has donated all his shares (29.5% equivalent to US$18 billion) to a newly established charity of HNA Group in New York, the Hainan Cihang Charity Foundation in June 2017. New York-registered Cihang Foundation and Hainan Province Cihang Foundation held 52% shares. (New York-registered Cihang Foundation have also donated a large sum of money to Harvard University)
  • On November 8, 2017World Economic Forum announced that Philipp Rösler, the former Deputy Chancellor and Minister of Economy of Germany would become the chairman of the Hainan Cihang Charity Foundation from December 1, 2017.

The Second Stage:Being Exposed HNA (2017-2019)

In April 2017, Miles Kwok broke the news and quickly cut the capital chain of HNA at home and abroad.

Chen Feng was interviewed by HongKong media in June 2017 and refuted Guo’s allegations as nonsense. He also told South China Morning Post that HNA has filed a lawsuit to charge Guo Wengui for defamation in a New York County court on June 15, 2017.

Chen Feng

On March 4 2019, HNA filed application to a U.S. court to withdraw the $300 million defamation lawsuit against Guo Wengui, an exiled businessman. But Guo Wengui refused to accept this request.

In June 2017, Chinese media reported that the China Banking Regulatory Commission required banks to check the credit and risk analysis of HNA Group. This means that models such as HNA’s huge loans from Chinese banks for overseas acquisitions have been officially “halted.”

Bank of America also decided to suspend cooperation with HNA because of concerns about the opacity of HNA’s equity. HNA’s acquisition of Deutsche Bank also attracted the attention of the European Central Bank.

HNA failed to gain approval from the U.S. Investment Commission for the acquisition of SkyBridge Capital, Mr Scaramucci‘s hedge fund.

HNA has established hundreds of affiliated companies, and those private and public companies often have business dealings-swap assets, merge, and then restructure. HNA’s liabilities are more than US$100 billion, a large part of which borrowed from China state-owned banks.

In 2013, HNA began a crazy global acquisition. This snake-swallowing-elephant kind of leveraged acquisition, the primary sources of funding include bank borrowings, bond issuance, and matching financing. High capital requirements may also involve backdoors, which often attract outside attention as soon as they appear.

In the company statements reviewed by the New York Times, the roles of HNA Group executives and their relatives were effectively hidden by a series of foreign wholly-owned enterprises outside Communist China.

On December 13, 2017, eight Chinese banks, including the China Development Bank, flew to HNA’s Hainan headquarter in a group, made a loud statement that they fully supported the development of HNA. However, on January 17, 2018, People’s Daily interviewed Guo Shuqing, chairman of the China Banking Regulatory Commission and he said, “a small number of lawbreakers have built huge financial groups through a complex structure, making false capital contributions and circulating capital injections.” This is the nature of the chaebol.

Chen Feng, Wang Jian’s Public Speech

Chen Feng,Wang Jian

On January 18Chen Feng, chairman of the board of directors of HNA Group, also acknowledged to Reuters that the company had liquidity problems. HNA currently has a debt of US$93 billion. Banks forced HNA to repay its debt. HNA started to sell its properties for at least $5 billion in annual interest. But it is not enough to cover operating expenses.

In February 2018, the late Chairman Wang Jian described HNA’s overseas economic activities and investments in the group’s internal speech as “the Party’s strategy” and “the party’s general policy.”

On June 19, 2018, Bloomberg reported that Xi Jinping‘s top authorities have decided to help HNA raise money to help it weather the crisis. Zhongnanhai, CCP’s high authorities, decided that HNA had encountered liquidity problems and had to lend a hand to support it through the difficult times.

The Third Stage: HNA’s Sell Sell Sell

On November 1, 2017, HNA industry mortgaged its equity of Sanya new airport company with RMB 5.899 billion yuan to Guomin Trust Company.

November 2017The Swiss Takeover Board found HNA provided incorrect shareholdings for the top two stakeholders — Bharat Bhise and Guan Jun — in the Gategroup offer prospectus last year.

On December 15, 2017, Hainan Cihang public welfare fund sold 919 million H shares of Postal Savings Bank of China at an average price of HK $3.08 per share to cash in HK $2.83 billion, with the shareholding reduced from 8.73% to 4.6%.

Hedge fund Elliott took advantage of HNA’s liquidity squeeze and obtained a 5.6% stake in Dufry, which reduced its shareholding from 20.9% to 15.3%.

On January 26, 2018, HNA Group sold oneyork, an office building in Sydney, to Blackstone Group for AUD 205 million (about 1.05 billion yuan)

In February 2018, HNA Group sold 1180 Avenue of Americas on 6th Avenue in Manhattan, New York for $300 million, and the buyer was Northwood Investors.

The subsidiary of HNA Group also sold a mansion located in the 64th block of the Upper East Side for $90 million.

On February 13, 2018, Hong Kong International Construction Investment Co., Ltd., a subsidiary of HNA Group, sold land 6562 (land No. 3, Kai de 1L District) and land 6565 (land No. 3, Kai de 1K District) to Henderson Real Estate Co., Ltd. (Lee Shau Kee) for an average floor price of RMB 15.95941 billion.

HNA was the largest shareholder of Deutsche Bank with a 9.9% stake. Through c-quadrant, an Austrian asset management company owned by HNA, its holding was reduced to 8.8% (Mischa and DT have posted the evidence in twitter to explain Austrian company)

On March 6, 2018Park Hotels & Resorts announced that HNA Group would sell 34.5 million shares of Park hotels for $25.75 per share, with a cash out of about $888 million. At the same time, HNA will sell 14 million shares to Park Hotels at $24.8488 per share, with all the shares accounted for about 90% of the share capital, valued at $1.236 billion, or about HK $9.64 billion.

On March 9th, 2018Wheelock Properties Real Estate (Liang Zhijian) purchased the No.1 plot of No.1 L1 in Kai Tak from Hong Kong International Construction Investment, a subsidiary of HNA Group, for approximately HK$6.359 billion. The site area is approximately 78,71 square feet. The high floor area is 425,361 square feet, and the average floor area is 14,950 yuan.

On March 12, 2018HNA Foundation sold 100% equity of Hainan Gaohe Real Estate and HNA Island Logistics to Hainan Rongchuang Changsheng Real Estate, a subsidiary of Hainan Rongchuang, with approximately 1.133 billion yuan and approximately 797 million yuan, totaling 1.933 billion yuan.

On March 27, 2018Bohai Financial Holding Co., Ltd. (sz000415), a subsidiary of Tianjin Bohai Financial Holding Co., Ltd., announced that the transfer of 1.65 billion shares of Wanjiang Financial Leasing Co., Ltd., accounting for 35.87% of the shares, with the transfer price not less than 1.8 times of the assets per share. After completion, the share ratio of Tianjin Bohai holding Wanjiang Leasing Co., Ltd. will be reduced from 53.65% to 17.78%. By the end of June last year, the net asset per share of Wanjiang Leasing was 1.27 yuan. According to this calculation, the transfer price of Tianjin Bohai will not be less than 3.77 billion yuan.

Avolon, a subsidiary of HNA, will sell 41 aircraft leasing assets with lease to Sapphire Aviation for $884 million, or about HK $6.9 billion.

In April 2018Aerial Wonder, a subsidiary of HNA, sold 295 million H shares on April 10 and April 16, respectively, all of which sold the investment in Guangzhou Agricultural and Commercial Bank, with the transaction price of HK $5.12/share and cash out of HK $1.512 billion.

HNA reduced its stake in Deutsche Bank from 8.8% to 7.9%.

On April 24, 2018, HNA sold 26.1% of its shares in Hilton Worldwide Holdings for $5.9 billion, of which 16.5 million shares were repurchased by HLT at $70.9925 per share, and the remaining 66 million shares were sold at $71.7 per share.

After Wang Jian‘s death, HNA said it would transfer 15% of Wang Jian‘s shares (about 9 billion US dollars) to Hainan Cihang Public Welfare Fund. In this way, the two Cihang companies hold 68% of the shares of HNA Group.

On August 9, 2018Orix agreed to acquire a 30% stake in Avolon Holdings, the world’s third largest aircraft leasing company, from Bohai Financial Holdings, a subsidiary of HNA Group, for $2,222.4 million in cash. ORIX will complete the acquisition in November and the Avolon board of directors has two seats.

At the end of November 2018, HNA holdings announced that it had applied for a loan of RMB 7.5 billion from a consortium of seven banks including China Development Bank. However, the loan seems to be of limited use to ease the liquidity pressure of HNA holdings.

On January 7, 2019CapitaLand Group said that it purchased about 70% of the area of Shanghai Shanghai Pu Fa Building from HNA at a transaction price of 2.752 billion yuan.

On February 1, 2019Hong Kong International Construction Investment Managment Group, a unit of HNA group, sold itst last land parcel in Hong Kong to developer Wheellock and Co’s property for about HK$6,889 billion.

According to the announcement of Shanghai Brilliian Credit Rating & Investors Service Co. in March 2019, Higher People’s Court of Shandong Province had frozen the holding shares of HNA group and his subsidiary the Grand China Air Co until 2022-03-13.

On March 8, 2019Hong Kong International Construction Investment Management Group, controlled by HNA Group said that Times Holdings II Ltd, a company controlled by Blackstone, has agreed to buy all the shares owned by HNA Group’s finance arm HNA Finance I, or 69.54 percent of the firm for HK$7.02 billion. 【Reuters

HNA group further reduced the holding share of Deutsche Bank, from 7.9% to 5.1%.

Brazilian airline Azul

March 14, 2019, Hainan Airlines sold two Boeing 737-800 planes for US$27.5 million. On the same day, Hainan Airlines Civil Aviation Investment Ltd, a subsidiary of Chinese group HNA, was sold to Global Aviation Ventures LLC Fund and Brazilian Airline Azul for US$55 million.

On April 16, 2019CWT International Limited (00521.HK), a subsidiary of HNA, issued an announcement stating that because the company failed to pay the lenders accrued interests and certain expenses under the financing agreement totalling HK$ 63 million, the lenders will obtain management rights over all of the mortgaged assets, including Credit Suisse Building.

April 30, 2019, HNA sells 100% of gategroup holding AG, the airline catering and retail on board, to Asian investment firm – RRJ Capital

Hainan Airlines Holding and Hainan’s subsidiary Air Changan moved 16 aging planes to the Hong Kong-based holding company in total, in a combined deal worth CNY2.76 billion ($399 million) 【Flightglobal

June 11, 2019, HNA group disposed 2 aging planes for US$25.8 million

Beijing HNA Plaza

July 5, 2019, HNA Group has sold the remaining 75.10 percent stake of Beijing Guosheng strata management Ltd to Zhuhai Wanhoumei Enterprise Management Ltd a subsidiary of China Vanke for a total consideration of RMB 1.304 billion ($190 million), according to a filing. 【Mingtiandi

Renaissance Shanghai Pudong Hotel

July 16, 2019, HNA asked RMB 803 million for 100 percent of the equity in the holding company for the Renaissance Shanghai Pudong. 【Mingtiandi

In August 2019, HNA intended to sell seven assets of approximately CN¥1.254 billion, including those in Haikou, Wenchang, Danzhou, and Qiongzhong etc.

Ingram Micro

August 26, 2019, A consortium led by RRJ Capital, which founded by Richard Ong, former partner of Goldman, finalized a deal with HNA Group to take the controlling stake of Ingram Micro Inc for US$4 billion. 【Reuters

According to the press, HNA group has CNY65 billion bonds to be settled in the 1st quarter of 2018. Until Nov 2017, the total amount of short and long term debt had reached CNY637.5 billion, surged 36% in one year. Presumably, the overall debt, including both listed and unlisted companies, had reached CNY1 trillion, and China Development Bank is the biggest creditor. By estimating, its overall debt will exceed CNY1.4 trillion in 2019, and interest will be CNY60 billion per year.

HNA group had issued multiple bonds, all of them went default. Large number of frontline staff hadn’t recieved salaries for 4 months. Some employees condemned the company online. (default means unable to pay back once the bond matures)

Picture: REUTERS/ELIAS GLENN

September 2019Swiss Financial Market Supervisory Authority (FINMA) announce that it will lodge a criminal complaint against HNA conglomerate for the faulty disclosure of its share holding structure. 【Reuters

Daniel Chen

October 2019, According to Caixin, Daniel Chen(Chen Xiaofeng), son of chairman Chen Feng, has been appointed as president of HNA group.

On October 14, 2019, HNA Group issued an internal document to cancel the HNA Logistics sector, leaving only one sector – HNA Airlines. HNA’s three-level management structure (HNA Group – HNA’s two major industrial groups – its subordinate business companies) has become a two-level management structure, that is, the group controls directly the company’s business.

Xi’an Datang Night City Property

On November 22, 2019, HNA’s major commercial retail industry the Supply and Marketing Daji Group Co., Ltd (000564.SZ) announced that the company would sell its core real estate, Xi’an Datang Night City Property, at a transaction price of 1.186 billion yuan. The ultimate actual controller of the Supply and Marketing Daji Group Company is the mysterious Hainan Province Cihang Charity Foundation.

On November 22, 2019Hong Kong Sun Hung Kai Corporation (00086.HK) and the Australian Investment Bank Macquarie Group paid GBP£100 million to purchase No. 17, Canary Wharf Office Building, Columbus Courtyard in London from HNA Group (17 Columbus Plaza, also known as Credit Suisse Building). The price was much lower than HNA’s original purchasing price of GBP£131 million. HNA now has no longer own any British real estates.

On December 2, 2019, HNA Group and Chongqing Yufu Assets Management Group signed a restructuring agreement in Chongqing, and this Chongqing State-owned Assets Supervision and Administration Commission will control HNA Group’s Western Airlines.

On December 2, 2019, HNA Holdings Group, a subsidiary of HNA Group, announced that the second meeting of the ninth annual meeting of board of directors of HNA Holdings considered and approved the Report on Applying for Loans from Banks. The syndicate of initial lenders, led by China Development Bank and its correspondent banks, China Exim BankBank of China Co., Ltd.Agricultural Bank of China Co., Ltd.Industrial and Commercial Bank of China Co., Ltd., China Construction Bank Co., Ltd., Bank of Communications Co., Ltd., and China Post Savings Bank Co., Ltd., singed financing agreements with HNA and each of the eight banks loaned CN¥500 million to HNA, for a total of CN¥4 billion.

On December 7, 2019, the Securities Times reported that the Hong Kong Civil Aviation Administration issued the severest warning to Hong Kong Airlines, a subsidiary of HNA, asking Hong Kong Airlines to improve its financial status, or it will revoke its aviation license. It is reported that its parent company, HNA Group, obtained a US$ 568 million loan from state-owned banks to pay wages, aircraft leasing, airport fuel charges and other costs. Hong Kong Airlines has postponed salary payments to some of its employees for their November wages. According to some reports, Hong Kong Airlines has fallen into a financial crisis since January 2019, and the entire HNA group owed Hong Kong Airlines as much as HK$ 6.47 billion.

On December 13, 2019, Hainan Airlines Holdings Co., Ltd. (HNA Holdings) issued an announcement to disclose that Shanxi Airlines Co., Ltd., a holding subsidiary of HNA Holdings, would sell a Boeing 737-800 aircraft to Everbright Hongqing (Tianjin) Aviation Leasing Co. Ltd. The transaction contract value was US$25 million dollars.

On December 26, 2019, HNA Holdings issued an announcement that in order to repay loans to financial institutions, the company’s controlling shareholder, Daxinhua Airlines, reduced its holding of 2.5312 million shares in HNA through centralized bidding process. Up to December 19, Daxinhua Airlines had reduced its holding of 162 million shares of HNA.

On December 27, 2019HNA Infrastructure Investment Group issued an announcement stating that its 4 subsidiaries, HNA Infrastructure GroupHNA Real Estate HoldingsHaihang Linkong Group and Tongxiang Nanhai Mingzhu Equity Investment Partnership (Limited Partnership), planned to sign an Equity Transfer Agreement with HNA Real Estate Development Co., Ltd. for transferring 100% equity in Hainan Golden Coast Group Co., Ltd., which is jointly held by the aforementioned four companies. The total equity transfer price was CN¥10.132 billion.

In “HNA Group Chairman’s New Year Message for 2020: Welcome to the Dawn and Start a New Journey of HNA Business,” published on December 30, 2019, HNA Group admitted the fact that HNA delayed and deferred wages payment.

Edited [HimalayaHawk]

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