NEW YORK, Nov 7 (Reuters) - China’s heavily indebted airline-to-property conglomerate HNA Group has agreed a sale and repurchase deal on some of its shares in Spain’s NH Hotel Group to raise cash for internal financing.
HNA, which has taken on billions in debt to fund a $50 billion acquisition spree in the last two years, faced rising funding costs in recent weeks as investors worry about its financial health.
In a statement to Spain’s market regulator CNMV, HNA said it will sell and buy back a 1.14 percent stake in NH Hotel to “provide liquidity to HNA globally in the context of internal financing”. The transaction was done with an institutional investor not named by HNA.
With a 29.5 percent stake in NH Hotel before the latest transaction, HNA is the biggest shareholder in the Spanish company, which has a market capitalisation of 1.89 billion euros ($2.19 billion).
A 1.14 percent stake in NH Hotel is valued at around 21.5 million euros. HNA did not say how much cash it would get from the sale and repurchase deal.
HNA was not immediately available for a comment.
Data from Thomson Reuters Eikon showed HNA Group has $17.2 billion of outstanding bonds, of which $2.3 billion are due in 2018 and $4.6 billion are due in 2019.
Last week HNA sold $300 million worth of short-dated bonds at an 8.875 percent coupon at par, partly to refinance its foreign debt.
Analysts said the sale showed HNA’s rising funding costs as the yield offered was higher than the yield on HNA’s December 2018 bond at the time of pricing, according to Thomson Reuters data.
Headquartered in China’s southernmost island of Hainan, HNA is also one of the biggest shareholders in Deutsche Bank .
The conglomerate, which is 52.3 percent controlled by two charities in China and New York, has attracted substantial regulatory scrutiny in the past year due to its ownership structure.
HNA’s investment in NH Hotel has also run into problems. About 60 percent of shareholders in NH Hotel agreed earlier this year to oust HNA-appointed members from its board over what they said was a conflict of interest due to HNA’s takeover of a rival hotel group. ($1=0.8633 euro) (Reporting by Koh Gui Qing)