HONG KONG — Companies do not readily admit reaching a point of “life and death.”
So when HNA Group did just that in a social media post, it was evident that Executive Chairman Gu Gang’s attempts to deal with a crushing debt burden at the formerly acquisitive Chinese conglomerate had not been going smoothly.
Gu was appointed in February to deal with a debt load estimated at $74 billion, the remnants of an acquisition spree that led the group to buy stakes in companies ranging from Deutsche Bank to Hilton Worldwide.
The group began life in 1993 as a regional airline based on Hainan island in southern China. With the company now hounded by bondholders and negative cash flows amid the coronavirus pandemic, some analysts see HNA sliding back to its origins as a small regional carrier.
About $25 billion worth of offshore and domestic bonds are due to mature by the end of 2028, with maturities peaking in 2024, data from Dealogic shows. All those maturing this year are domestic bonds. But offshore debt accounts for $300 million of next year’s total of $2.25 billion and a majority of 2022’s.
Managing repayments has been complicated further by the pandemic, which has sent markets into gyrations, dulled investor appetite for at any HNA asset sales and stalled the group’s operations including airlines, airports and tourism.
“The coronavirus outbreak has just magnified the liquidity crisis at HNA,” said Warut Promboon, a credit analyst with research company Bondcritic in Hong Kong. “The aim would now be to meet offshore bond obligations and coerce local investors to accept a delay, hoping asset sales can resume sooner rather than later.”
HNA’s financial troubles were on display in the confusion over an onshore bond worth 390 million yuan ($55.1 million) that was due Wednesday. Just hours beforehand, the company said it had won approval to defer repayment at a hastily