HNA, the parent company of Hong Kong and shipping, has obtained 4 billion loans from 8 banks led by China Development Bank

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 HNA, the parent company of Hong Kong and shipping, has obtained 4 billion loans from 8 banks led by China Development Bank


In the evening of December 2, HNA holdings announced that it had obtained a total of 4 billion yuan loan from eight banks led by the National Development Bank, which was used for the operating expenses of HNA holdings and its subordinate airlines.

In 2006, HNA acquired Hong Kong Zhongfu aviation through its subsidiary and renamed it Hong Kong aviation. Since then, HNA has been regarded as the parent company of Hong Kong Airlines.

According to the Ta Kung Pao, also on the evening of the 2nd, the staff circle of Hong Kong and shipping also spread the news that grain (wage) is in sight. According to Hong Kong media, relevant information may bring dawn to Hong Kong Airlines, but it is unknown whether it will be used for Hong Kong Airlines.

The announcement of HNA holding pointed out that the board of directors of HNA holding agreed that the company, with the National Development Bank as the lead bank and agent bank, and with the import and Export Bank of China, Bank of China Limited, Agricultural Bank of China Limited, industrial and Commercial Bank of China Limited, China Construction Bank Limited, Bank of Communications Limited and postal savings bank of China Limited The bank group consisting of the initial lenders of Hainan Airlines Holding Co., Ltd. signed the RMB fund bank group loan contract for the 2019 working capital loan joint credit project of Hainan Airlines Holding Co., Ltd., and the company applied to the bank group for loans totaling 4 billion yuan (each of the eight banks provided 500 million yuan).

According to the announcement, the loan term is 3 years, of which the first 2 years are grace period. The interest rate of the loan is fixed, i.e. the annual interest rate is 4.75%, and the interest rate will not be adjusted during the loan term agreed in the contract.

According to the announcement, the loan is used for operating expenses such as aviation oil, aviation materials, takeoff and landing fees, personnel salaries, aircraft rents, etc. of HNA holding and its subordinate airlines.

Screenshot of Hainan Airlines official website, Hong Kong Airlines listed

Referring to the impact on listed companies, HNA explained that the purpose of this application for bank loan is to promote the stable development of the companys daily business, ensure the safety and order of the companys operation, help the company to further prevent risks, focus on the main business operation of aviation, improve the companys business performance, and not damage the interests of the company and small and medium investors.

Shortly before HNAs announcement, Hong Kong Airlines was warned by the Hong Kong SAR government to revoke its licence.

According to the Hong Kong SAR governments press release on December 2, the air transport licensing authority heard the latest financial situation of Hong Kong Airlines from the management on November 29, and believed that the companys financial problems had seriously deteriorated, affecting its responsibility to pay remuneration and the possibility of providing aviation services on a continuous and regular basis, the situation is extremely worrying.

The air transport licensing authority requires Hong Kong Airlines to ensure that it can inject funds (or provide other solutions to the satisfaction of the licensing authority) formulated by the licensing authority before the deadline, and at the same time, it requires to increase the liquidity stock to a reasonable level formulated by the licensing authority. If Hong Kong Airlines fails to improve its financial situation within the deadline as required, the licensing authority may revoke or suspend its aviation license. Relevant decisions It will be announced on or before December 7.

According to Hong Kongs Ta Kung Pao, on the evening of December 2, a message circulated among the staff of Hong Kong Airlines that grain is in sight and that the licensing bureau has reached a restructuring agreement with the company, including adjusting the route and reducing the number of staff. Hainan Airlines then issued an announcement. The report pointed out that the relevant information may bring light to Hong Kong Airlines, but it is not known whether it will be used for Hong Kong Airlines.

In addition to Hong Kong Airlines, the airlines that handle passenger transport based in Hong Kong include Cathay Pacific, Dragonair and Hong Kong Express. It is worth noting that Cathay Pacific holds the latter two shares, and Hong Kong Airlines is the only non Cathay Pacific passenger airline in Hong Kong.

Although HNA is still generally referred to as the parent company or controlling shareholder of Hong Kong Airlines, in fact, the equity changes of Hong Kong Airlines in the past decade are complicated. At the beginning of this year, it was also reported that Hong Kong and shipping had an internal fight over the equity issue. And the deterioration of port and waterway operation is not a one-day problem. As early as April this year, Hong Kong and shipping shareholders were told that the company needed at least HK $2 billion in new capital, or it would lose its aviation service license, Reuters reported.

Source: responsible editor of observer network: Zhou Xinyi ufe63 nb12002