China's HNA Group Uses More Valuable Assets to Borrow Money
By Anjani Trivedi
Debt-laden Chinese conglomerate HNA Group Co. used another one of its most valuable assets to borrow more cash for the third time this month, increasing the size of a loan backed by its ownership in the Hilton hotel chain.
HNA, which owns a roughly 25% stake in Hilton Worldwide Holdings Inc., added half a billion dollars of debt to a $3 billion share-backed loan used to purchase the stake last year, according to regulatory filings. The total stake was purchased for $6.5 billion from private-equity firm Blackstone Group LP and the loan was led by JPMorgan Chase & Co.
Shares of Hilton and its affiliated companies that HNA borrowed against have risen significantly since HNA bought the stake.
HNA's move to raise more debt against one of its most well-known--and liquid--assets comes a week after it added debt to its Deutsche Bank AG stake and pledged its shares in one of China's largest banks, underscoring the once-acquisitive conglomerate's tightening cash situation.
The airlines-to-asset management group has spent about $40 billion since 2015 buying up stakes and companies across the world, much of it backed by debt. It frequently pledged shares in companies it had purchased to raise financing. The group has estimated it has more than $100 billion in debt.
The buying spree has now slowed sharply. In recent months, the company has sought to calm investors and lenders, buying back bonds and highlighting its access to credit lines. It has struggled to raise debt in stock and bond markets.
HNA didn't immediately respond to comment.
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(END) Dow Jones Newswires
December 29, 2017 23:58 ET (04:58 GMT)Copyright (c) 2017 Dow Jones & Company, Inc.