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HNA Is in Advanced Talks to Sell Swissport to Brookfield

Signage for HNA Group Co. is displayed atop the company's building in Beijing, China, on Thursday, Feb. 1, 2018. Companies linked to HNA have secured 7.8 billion yuan ($1.2 billion) in long-term loans from Chinese banks to finance an expansion project in Meilan Airport in HNA's home province of Hainan.

(bloomberg)

(Bloomberg) -- HNA Group Co. is in advanced talks to sell its Swiss airport-cargo handler to a Canadian asset manager, according to people familiar with the matter, in what could be the debt-laden Chinese conglomerate’s biggest disposal since it unloaded its Hilton Worldwide Holdings Inc. stake in April.

Brookfield Asset Management Inc., based in Toronto, has emerged as the preferred bidder for Swissport International, the people said, asking not to be identified because the discussions are private. Swissport -- which also offers ticketing, cabin cleaning and aircraft maintenance -- could fetch more than $3 billion, the people said.

An agreement would build on what’s already been one of China’s biggest corporate garage sales in history. HNA is facing pressure to reduce the unsustainable debt levels accumulated in recent years, when it was at the forefront of the country’s global buying binge. Other high-profile Chinese trophy hunters such as Anbang Insurance Group Co. and Dalian Wanda Group Co. have also been hunkering down by selling assets worldwide.

Representatives for HNA, Brookfield and Swissport declined to comment.

While the Swissport talks are at an advanced stage, no final decisions have been made and they could still fall apart, the people said. Other bidders remain interested in the asset, the people said.

Cerberus Capital Management was among suitors earlier pursuing an acquisition of Swissport, Bloomberg News reported in August. Singapore state investment company Temasek Holdings Pte has also been studying a potential investment in Swissport as it considers deals with HNA that are complementary to its portfolio, people familiar with the matter said in April.

HNA agreed to buy Swissport from buyout firm PAI Partners for 2.73 billion Swiss francs ($2.8 billion) in 2015, at a time when the Chinese group was on a buying spree. Swissport had been slated for an initial public offering, though the conglomerate decided to postpone the share sale in April amid a volatile market for listings.

HNA, which is saddled with one of the highest levels of debt in corporate China, still has billions of dollars in assets up for sale. It’s planning to exit its investment in Deutsche Bank AG and is seeking a buyer for its $1 billion container-leasing business Seaco, people familiar with the matter have said. It also plans to surrender eight floors of office space in Hong Kong and is selling stakes in various Chinese units, Bloomberg News reported last month.

Beyond financial challenges, HNA was roiled by the sudden death of 57-year-old Co-Chairman Wang Jian in July, a tragedy that threw a wrench at the company’s normalization plans as Wang was said to be the mastermind behind the purchase of many of the assets that are now being sold.

Chairman Chen Feng has since stepped up, promoting two family members as key lieutenants in August and tightening his control over the group as he seeks to persuade banks, investors and the government to restore their confidence in HNA.

--With assistance from Jan-Henrik Förster.

To contact Bloomberg News staff for this story: Manuel Baigorri in Hong Kong at mbaigorri@bloomberg.net;Cathy Chan in Hong Kong at kchan14@bloomberg.net;Scott Deveau in New York at sdeveau2@bloomberg.net;Haze Fan in Beijing at hfan40@bloomberg.net

To contact the editors responsible for this story: Ben Scent at bscent@bloomberg.net, ;Sam Mamudi at smamudi@bloomberg.net, ;Elizabeth Fournier at efournier5@bloomberg.net, ;Emma O'Brien at eobrien6@bloomberg.net, Young-Sam Cho

©2018 Bloomberg L.P.

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