(Yicai Global) Aug. 9 -- Japanese financial services group Orix plans to take a 30 percent stake in aircraft leasing firm Avolon Holdings from HNA Group as the Chinese conglomerate begins to divest some of its core assets.

Orix Aviation Systems has agreed to pay USD2.2 billion for the shares in the Dublin-based lessor and the deal is expected to close in the fourth quarter of this year, the seller, HNA's Bohai Capital Holdings, said in a statement yesterday. Bohai picked up a 100 percent stake in Avolon, which ranks third on FlightGlobal's list of the most valuable self-own aircraft fleets, for USD2.5 billion in 2015.

Orix, which will be able to nominate two of Avolon's seven directors, is a leading non-banking financial institution with extensive professional experience in aircraft chartering, Bohai added. By introducing Orix as an investor, Avolon will be able to enhance its international credit ratings, seize new business opportunities by pairing up resources, and gain access to the Japanese market.

With its new asset, Orix will have access to Avolon's fleet of 562 aircraft and the more than 300 it has on order -- which make the target three times larger than its new part-owner.

Proceeds from the sale will mostly go toward repaying Chinese bank loans and other maturing liabilities to reduce the debt ratios of Bohai and its parent, which has been fending off creditors after a multi-year, USD50 billion international spending binge that sparked a regulatory probe into its borrowing and ownership structure. The spree's orchestrator, Co-Chairman Wang Jian, has since passed away after falling from a wall in France.

The splurge, paired with Beijing's demands to deleverage and attempts to curb "irrational" overseas spending, left HNA in a puddle of mud as it struggled to get its financials in order. It began selling off a bunch of non-core assets earlier this year, such as properties in Hong Kong and New York and stakes in Hilton Grand Vacations and Deutsche Bank, before moving closer to home and shedding a flagship development in Haikou, where HNA is based.

As of the end of the first quarter, Bohai had total liabilities worth CNY257 billion (USD38 billion) with a debt ratio of more than 88 percent.

Editor: James Boynton