The HNA logo is seen on a building in Beijing on Feb 18, 2016. (GREG BAKER / AFP)
The first batch of 62 companies under HNA Group, including three listed companies, has entered bankruptcy restructuring, said the company on Saturday.
The three listed companies, HNA Holdings, HNA Infrastructure and CCOOP Group Co Ltd, cover aviation, infrastructure and investment, as well as commodity circulation.
HNA Group, parent company of Hainan Airlines, said on Friday it has received notice from the Hainan High People's Court that creditors had sought the company's bankruptcy and restructuring, after a government-led effort to rework its debts did not succeed.
An HNA executive said the bankruptcy and restructuring will not affect HNA's aviation business, which comprises 14 companies and 700 commercial aircraft and is the country's fourth largest air carrier
HNA said it will cooperate with the court's review, push forward debt restructuring. It will also support the court's efforts to protect the legitimate rights and interests of the creditors and ensure normal operations of the company.
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The company will undertake a series of measures, such as debt transfer, debt-swaps and debt restructuring, and look for new strategic investors, said an HNA executive who did not want to be identified.
Introduction of new strategic investors will bring new funds that could put the company back on the healthy track, said the executive.
The debt-ridden airline group requested Hainan province for assistance last February after its "self-rescue" efforts failed to resolve the risks.
The provincial government formed a joint working group last year in an effort to streamline the shareholding patterns of more than 2,000 enterprises under HNA Group to get a clear picture of the total assets and debts.
Of the more than 2,000 companies, 90 percent of are shell companies, and only around 200 companies are in real business operations, said the executive.
The first batch of 62 companies is part of the 200 companies, taking up nearly 60 percent of the group’s total debts, the source said.
The second phase is expected to involve about 400 companies into bankruptcy and restructuring, which are estimated to take up 85 percent of debts of HNA, according to the source.
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The executive said the bankruptcy and restructuring will not affect HNA's aviation business, which comprises 14 companies and 700 commercial aircraft and is the country's fourth largest air carrier.
Gu Gang, Party secretary of HNA Group, wrote a letter to the 100,000 employees of HNA on Friday that the objective of the plan is not bankruptcy, but to reconstruct.
Gu, the former executive chairman and board member of HNA, resigned from his current positions at HNA last Friday and was elected the Party secretary of HNA, according to a company statement. The working group will continue to lead the risk resolution work, it said.
HNA has controlling stakes in 18 listed companies.