Another Funding Fiasco Forces HNA Unit to Nix Its USD143 Million Private Placement

Another Funding Fiasco Forces HNA Unit to Nix Its USD143 Million Private Placement

Liao Shumin

Date: Thu, 12/07/2017 - 00:21 / source:Yicai
Another Funding Fiasco Forces HNA Unit to Nix Its USD143 Million Private Placement
Another Funding Fiasco Forces HNA Unit to Nix Its USD143 Million Private Placement

(Yicai Global) Dec. 6 -- HNA Investment Group Co. [SHE:000616] (HNA Investment), a subsidiary of HNA Group (HNA), has finally ditched its private placement plan under preparation for over two years after awaiting approval for more than one year. 

The company has thus terminated its 2015 private placement plan and applied to China Securities Regulatory Commission (CSRC) to withdraw its application. 

HNA, whose business encompasses such fields as aviation and hotels, has suffered lately from a series of financing false starts. The cancellation of the non-public issuance of stock shows once again that HNA is facing tougher scrutiny after making large-scale acquisitions around the world. 

HNA Investment released its non-public issue plan In April 2015 to raise up to CNY5.2 billion (USD785.7 million), CNY2.3 billion of which was to go to buying a 19.7 percent stake in Sinosafe General Insurance Company Ltd., and CNY2.9 billion to buy 100 percent of shares in Xinsheng Medical Group, a plan China’s securities regulator (CSRC) approved in May last year. 

As the company had not yet received any written approval from CSRC, it proposed extending the period of validity of the resolution adopted in June 2015 to May 27 this year. 

As of May, however, the company had still failed to elicit the nod from CSRC. Therefore, HNA Investment convened a shareholders’ meeting again that month, proposing to extend the resolution's validity to next May 27, but the shareholders rejected this with 76 percent voting nay in the first ballot. 

The profitability of the tendering and the time cost were the main concerns prompting the rebuff, Chinese Securities Journal quoted investors as saying. 

Xinsheng Medical Group, which HNA Investment sought to nab for CNY2.9 billion, earned net profit of CNY26.3 million and CNY38.6 million in 2014 and 2015, respectively, but cannot be deemed a good asset. CSRC’s delayed approval caused HNA Investment to log its first loss in its annual report for last year. Medium and small investors are unwilling to have the share price nosedive because of more time wasted on the project.

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Keywords: HNA INVESTMENT GROUP CO., Private Placements