HNA Sells Stake in Spain’s NH Hotels for $723M, Bringing 2018 Fire Sale to $14.5B

Embattled Chinese conglomerate HNA Group is shedding its stake in European hotelier NH Hotel Group, in the latest move by the debt-strapped firm to downsize its trove of overseas assets and raise badly needed cash.

HNA is selling the 25.2 percent equity stake to Thailand’s Minor International Plc, which owns some 40 hotels globally, including the Bangkok-based Anantara Group for a total of 619 million euros ($723 million).

The company founded by American entrepreneur William Heinecke said this past week that it plans to launch a takeover bid for all of NH Hotel Group after completing the two-stage share acquisition. Minor’s planned takeover would value NH Hotels at up to 2.5 billion euros ($2.9 billion).

Airline Group Steps Back from Overseas Hotels

HNA first invested in NH Hotels in 2013 and became the largest shareholder in the Madrid-based hotel chain the following year, as the parent company of Chinese carrier Hainan Airlines ramped up an offshore buying binge that ultimately totalled over $50 billion in global deals. The Hainan-based conglomerate hired banks to hawk its stake in NH Hotels this past January, following a sharp reversal of its acquisition drive.

The stake sale to Minor follows a series of major disposals by HNA, including the sale of a Minneapolis complex for $320 million revealed just this week. The sprawling conglomerate has now offloaded some $14.5 billion in assets this year, as it seeks to pay off a debt burden estimated to have surged to $94 billion in 2017, according to figures compiled by Bloomberg.

Analysts began to anticipate an HNA exit from NH Hotels late last year, after the company fell under scrutiny both in China and abroad for its debt-fuelled acquisitions and opaque ownership structure. The Spanish hotel chain had also become a public relations liability for the Chinese firm. NH shareholders kicked four HNA directors off the board in June 2016, citing conflicts of interest after HNA agreed to buy competitor Carlston-Rezidor hotel group. HNA’s Spanish subsidiary filed a lawsuit against the motion later that year.

HNA also plans to sell some or all of its 26.1 percent stake in hotel operator Hilton Worldwide Holdings, worth as much as $6.5 billion, after divesting its shares in two Hilton spinoffs in March for $2.4 billion. In addition to its stakes in hoteliers, the company chaired by billionaire Chen Feng is also reportedly marketing some $6 billion in commercial properties worldwide.

Thai Hotelier to Triple Property Count

Bangkok-based Minor’s newly announced share purchase follows an earlier acquisition of a 9.5 percent stake in NH Hotels from minority shareholders. Under the terms of the deal with HNA, Minor will take a 16.8 percent fully diluted stake in the hotelier in the first stage this month, followed by a further 8.4 percent stake by mid-September.

The conversion of some bonds to shares will boost Minor’s stake to about 38 percent, exceeding the ownership threshold which will allow the company to bid on a full takeover under Spanish regulations.

The buyout would more than triple Minor’s hotel portfolio, which currently stands at 161 hotels and serviced suites, under brands including Minor International, AVANI, Marriott, Four Seasons, St Regis, Radisson Blu, and The Beaumont. NH Hotels operates 382 hotels across Europe, the Americas and Africa.

“NH is a very strategic opportunity for us,” CEO William Heinecke told Bloomberg. “There’s no overlap between us and NH, they have virtually no presence in Africa, Middle East, Asia or Australia, where we’re extremely strong.”