HNA Unit Says Creditors Seized Assets in SG, US, China After Loan Default

Lenders to CWT International Ltd have seized control of its assets in Singapore, China and the US after the unit of HNA Group failed to repay a short term loan taken out last October, a filing to the Hong Kong Stock Exchange revealed late Monday.

Last week, CWT International (CWTI) announced that it had defaulted on the HK$1.4 billion ($179 million) loan by failing to make payment on accrued interest and fees totaling HK$63 million.

The company had revealed in a statement to the stock exchange at the time that its creditors had warned that, if the outstanding amounts were not repaid on 17 April, the lenders would “enforce the security and obtain possession of all charged assets.”

CWTI Loses Control of Singapore Logistics Firm, US and China Real Estate

Now CWTI, which HNA formed by merging Singapore logistics firm CWT Pte Ltd, which it acquired in early 2017 for around $1 billion with a listed Hong Kong entity revealed in its latest statement that “the security agent of the charged assets under the facility agreement has taken enforcement actions over certain of the charged assets on April 18, 2019.”

In real world terms, this means that CWTI’s creditors have taken over a the Hong Kong-listed firm’s 100 percent equity stake in Singapore-based CWT, including entities engaging in the logistic services, commodity marketing, engineering services and financial services.

In October last year, CWTI had pledged the CWT Pte stake, along with other assets, as collateral on a HK$1.4 billion ($179 million) one-year loan.

Now, after failing to make good on that loan, in addition to forfeiting its Singapore holdings, CWTI has also lost control of a set of Seattle area golf courses which it had purchased from local developer Oki Golf for $137 million in 2016.

HNA’s creditors have also seized control of a set of golf courses in China.

In its notice to the stock market CWTI indicated that the lenders have already appointed receivers and managers to oversee the seized assets, although the company did not comment on any potential liquidation. The company did, however, add that CWT Pte Ltd continues to conduct normal business operations.

London Assets Not Mentioned

It is, however, unclear if 17 Columbus Courtyard, an office building on London’s Canary Wharf which HNA had purchased via CWTI in July 2016 for ₤140 million ($183 million) would also be seized due to the default.

In February this year, HNA was said to be selling the building which provides London offices for Credit Suisse Group AG and other tenants, to Beijing-based Cindat Capital Management. While the exact transaction amount of the transaction was not revealed, Reuters reported that HNA put it on sale in 2018 with a value of $166 million.

HNA has been struggling since late 2017 to find a buyer for CWTI as its cash crunch worsened, and in July last year sold a set of five Singapore warehouses from the CWT portfolio to Mapletree Logistics Trust for S$730 million ($535 million). That sale, which came less than seven months after HNA closed on the CWT acquisition, represented a 3.3 percent discount to the properties’ earlier valuation.

Liquidation Not Happening Fast Enough

CWTI’s setback suggests that despite an 18-month fire sale which has seen the company liquidate assets in the US, Europe and Greater China, HNA is still struggling to cope with debts which in mid-2018 were estimated at $100 billion.

Earlier this month the debt-ridden group was said to have sold a site with two historical homes in Hong Kong’s prestigious Victoria Peak area for HK$550 million ($70 million), suffering a more than 22 percent loss on the property just over one year after purchasing it.

In February, HNA Group sold off its last piece of land in Hong Kong’s Kai Tak area at a HK$740 million ($94 million) loss. In the same month, the company was said to be selling the Reuters building in London for £135 million ($176 million) or 60 percent less than it had paid to acquire the asset in 2015.

In March, funds managed by Blackstone agreed to purchase a controlling stake in Hong Kong International Construction Investment Management Group (HKICIM), the primary listed property subsidiary of HNA Group, for HK$7.02 billion ($894.8 million).