海航集团| HNA Plans $1.2B Sale of Second Hilton Stake

HNA Group chief Chen Feng is restructuring the group to ease its financial crisis

Hainan Airlines, the flagship carrier of HNA Group, will take over the group’s hotel business as part of an asset restructuring by the troubled Chinese conglomerate. Hainan Airlines announced in a filing to the Shanghai Stock Exchange that it would acquire HNA Hotel Group Holdings Limited and an unnamed overseas hotel operator, along with several aviation businesses, from HNA Group.

The company is also in talks to dispose of some or all of its 25 percent stake in Hilton Grand Vacations, according to a report in the Wall Street Journal. The stake sale could bring in as much as $1.2 billion to help ease HNA’s financial crisis.

HNA Hotel Group Holdings manages the group’s domestic hotels. Its core businesses include real estate investments, hotel operation and management, according to the statement. The company is part of HNA Hospitality Group, which operates or has invested in about 8,000 hotels with over 1.2 million rooms around the world as of mid-2017, its corporate website shows.

HNA Follows Park Hotel Sale with Second Hilton Scheme

The acquisition by Hainan Airlines also includes an unidentified overseas hotel operator, whose major subsidiary is listed abroad. HNA owns a 25 percent stake in each of NYSE-listed Hilton Worldwide Holdings, Park Hotels & Resorts, and Hilton Grand Vacations.

Hilton Grand Vacations is the hotelier’s time-share business and HNA is said to be planning to sell its shares on the market, rather than to a specific partner, according to the Journal account. An announcement of the deal is expected this week.

Just last week, HNA Group was reported to be planning the sale of its $1.4 billion stake Park Hotels & Resorts Inc, a REIT that owns a portfolio of 50 hospitality properties across the US, Europe and Latin America.

HNA picked up its interests in Park Hotels and Hilton Grand Vacations through its $6.5 billion acquisition of a 25 percent stake in Hilton Worldwide Holdings from Blackstone in 2016. Hilton Worldwide was then split into three independent, listed companies including Park Hotels & Resorts and Hilton Grand Vacations Inc in January of last year.

HNA Shifts, Sells and Struggles

As part of the hotel restructuring deal, Hainan Airlines is also taking over controlling stakes in domestic airlines West Air and Guilin Airlines, aircraft maintenance companies HNA Technic and SR Technics Holdco I GmbH, and flight training provider Hainan Sky Plumage Flight Training Co, from its parent company HNA Group.

The values of the transactions, which will be facilitated by share issuance and cash payments, are not disclosed in the statement.

HNA plans to fit its hotel assets into its listed airline company

The reorganisation comes as HNA Group faces mounting financial distress after amassing an estimated $100 billion in debt. State-owned South China Bluesky Aviation Oil threatened to stop supplying fuel to Hainan Airlines after the carrier skipped payments and racked up an estimated RMB 3 billion ($476) fuel bill since last October.

Aside from its restructuring play, the conglomerate is also selling assets in a bid to ease its financial plight.

The proposed stake sale was followed by the group’s third disposal of a site in Hong Kong’s former Kai Tak airport area. HNA sold one of its remaining pair of Kai Tak plots to Wheelock and Company for $811 million on Friday.

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