HNA's 1.5b yuan bond default to be probed

Business | Bloomberg 27 Feb 2020

China's securities regulator will launch a probe into complaints filed by investors about the way HNA Group handled a privately-issued bond it defaulted last year, according to people familiar with the matter.

According to their complaints to the China Securities Regulatory Commission, the Chinese conglomerate has yet to repay its 1.5 billion yuan ($214 million) bond that came due in late July, they said.

The investors also accused HNA of committing fraud by issuing another bond on the maturity date of the defaulted bond, said the people. CSRC officials have yet to reply to emailed queries while calls to HNA's office responsible for securities information disclosure went unanswered.

The complaints also include the conglomerate prioritizing repayment of other bonds following the default, as well as a lack of proper information disclosure, they said. They added that CSRC's probe doesn't necessarily mean HNA has committed violations of law and regulations.

The latest development came as investors await the outcome of reported plans of a government seizure of the embattled firm, once the poster child for China's debt-fueled overseas acquisition spree.

The government of Hainan, the southern island province where HNA is based, is in talks to seize control of the firm which is struggling to balance its debt load as a result of the coronavirus outbreak, according to people familiar with the plans. Under the emerging plan, China would sell the bulk of HNA's airline assets to the country's three major state carriers.

Despite the investigation, some investors expressed skepticism about the actual impact it may have on HNA's fate.

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