(Bloomberg) -- China’s HNA Group secured strategic investors for its airline and airport businesses, a key step in the once high-flying conglomerate’s state-run reorganization and bid to move beyond its debt woes.
The administrators of HNA’s debt restructuring program have decided to bring in Liaoning Fangda Group Industrial Co. as the strategic investor for the airline business and Hainan Development Co. for the airport unit, according to exchange filings Sunday.
“The fact that HNA has finally found strategic investors months into its debt restructuring process is significant progress to creditors,” Bloomberg Intelligence analyst Dan Wang said.
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The restructuring aims to help Hainan Airlines Holding Co. and HNA Infrastructure Investment Group Co. reduce debt and improve profitability, the two companies said in their filings. There is still a risk of bankruptcy or delisting if their financial results don’t meet regulatory requirements, they said, without elaborating.
Hainan Airlines’ shares slid 4.8% early Monday in Shanghai, their biggest drop in five weeks, while HNA Infrastructure tumbled 5%, the biggest loss since May 31.
HNA hopes the restructuring plan will be approved by Chinese court before the end of October, Bloomberg News reported Friday, citing people briefed by administrators. Hainan Airlines and HNA Infrastructure both plan to issue new shares to the investors.
Hainan Airlines will hold its second creditors’ meeting to review the restructuring plan on Sept. 27, and HNA Infrastructure’s creditors’ meeting will be convened the next day, according to statements to the exchange.
Headquartered in Beijing, Liaoning Fangda’s businesses include carbon and steel manufacturing, pharmaceuticals and finance. It holds four companies listed in mainland China and has a workforce of more than 60,000. Hainan Development is owned by the government of Hainan, the southern Chinese island province where HNA is based. Its Chairman Gu Gang heads the workforce on HNA, which took over the group’s management in February last year.
(Updates with more information on restructuring, share price reaction.)
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