HNA Sells Second Hilton Spin Off for $1.1B As Aviation Regulator Presses for Fuel Payment

Debt-wracked HNA Group is selling another Hilton spinoff for $1.1 billion, less than two weeks after it sold a $1.4 billion stake in Park Hotels & Resorts Inc. The mainland conglomerate is in desperate need of fresh cash as it comes under pressure from China’s aviation regulator to pay outstanding fuel bills.

HNA Group will sell its 24 percent stake in Hilton Grand Vacations through a stock offering of 24.75 million shares, which were valued at around $1.1 billion at the company’s Tuesday closing price of $45.8, a filing to the US Securities and Exchange Commission by the hotel operator shows.

HNA Cashes in More Hilton Holdings

Headquartered in Orlando, Florida, Hilton Grand Vacations operates 63 hotels worldwide, most of them located in the US. HNA’s investment in the firm originated from the group’s $6.5 billion acquisition of a 25 percent stake in Hilton Worldwide Holdings from Blackstone in 2016. Early last year, Hilton Worldwide was split into three publicly listed firms, creating the two spinoff companies Park Hotels & Resorts Inc and Hilton Grand Vacations.

The reorganisation of Hilton’s holdings left HNA with a 25 percent stake in each of the trio of companies. Early this month, HNA was reported to be planning the sale of its stake in Park Hotels & Resorts, which was worth $1.4 billion.

The Hainan-based airline-to-property conglomerate still retains a $6.7 billion quarter-stake in Hilton Worldwide Holdings Inc.

Aviation Regulator Steps In as HNA Stumbles

The proceeds from the sale might help indebted HNA settle some of its bills. After Mingtiandi reported last week that HNA’s flagship carrier Hainan Airlines had received an ultimatum from state-owned South China Bluesky Aviation Oil to pay its overdue fuel fees or have its fuel supply cut off the Civil Aviation Administration of China (CAAC) is now chasing China’s best-known debtor firm.

CAAC, which oversees the nation’s airline industry, has asked HNA’s airline businesses to pay overdue bills including jet fuel and airport fees, according to a Bloomberg account this week. The Ministry-level regulator is said to have met with HNA Group executives to push for the payments.

However, CAAC has refrained from further actions against the indebted carrier to avoid disrupting flight operations and bringing inconvenience to passengers. Reuters reported last month that the airline had amassed outstanding bills of RMB 3 billion.

HNA has embarked on a selling spree to alleviate a financial crisis after piling up an estimated $100 billion in debt. A few days ago, HNA announced it would sell its 100 percent stake in two Hainan-based subsidiaries to Sunac China for RMB 1.9 billion ($300 million).

The sale followed the group’s third disposal of a site in Hong Kong’s former Kai Tak airport area. HNA sold one of its remaining pair of Kai Tak plots to Wheelock and Company for $811 million last week.