China’s HNA Group continued to sell off its overseas portfolio this month as a subsidiary of the company announced that it was selling a set of golf courses in the US which it had purchased in 2016 amid a record-breaking cross border buying binge.
CWT International Limited, a unit of HNA Group, announced in a filing to the Hong Kong Stock Exchange on November 1 that it has agreed to sell eight golf courses in the Seattle area for a total consideration of $86.5 million in an effort to pay down its outstanding debt and free up working capital.
The sale came more than six months after the financially troubled firm defaulted on the HK$1.4 billion loan, prompting lenders to have seized control of its assets in Singapore, China and the US, including the golf courses.
CWTI Sells Golf Courses After Default
CWTI, which HNA formed through its takeover of Singapore logistics firm CWT Pte Ltd., said in the statement that a unit of the company has entered into a sale and purchase agreement for the eight golf resorts with Magic Radiance Ltd, a privately held company said to be controlled by Elaine Bai.
The net assets of the eight properties, which include the Golf Club at Newcastle, Harbour Pointe Golf Club, Washington National Golf Club, the Golf Club at Redmond Ridge, the Plateau Club, Trophy Lake Golf & Casting, the Golf Club at Hawks Prairie, Indian Summer Golf & Country Club, was said in the statement to be approximately $113 million as of 30 June, or nearly 24 percent less than the sale price.
CWTI said that it considers the divestment an appropriate opportunity to dispose of its interests in the US properties, after taking into consideration negative market circumstances including increasing China-US trade tensions, macroeconomic downward pressures and the slow development of the US golf industry. The company also indicated that it was taking into consideration the average operational performance of the US properties and its need to dispose of non-core assets to increase its liquidity and cash position to enable the company to repay part of a HK$1.6 billion loan that it had taken out in September of this year.
The eight golf courses constitute the bulk of a portfolio of 10 sets of links which HNA had purchased from Seattle-based Oki Golf in October 2016 for a total of $137 million. That October acquisition formed part of a $10 billion month of acquisitions for HNA when the company was using top level lending support in mainland China to purchase logistics, real estate and tech assets around the world.
The golf buy followed just days after HNA’s Avolon Holdings subsidiary agreed to buy the aircraft leasing business of New York’s CIT Group for $10 billion, in a deal which Bloomberg reported would put the Chinese airline in charge of the world’s third-largest rental air fleet. Just last month HNA failed in an attempt to sell its remaining 70 percent stake in Avolon to Japan’s Orix Group, according to an account in Bloomberg.
Also in October 2016, HNA EcoTech agreed to buy Pactera Technology International, a China-based IT outsourcing firm from Blackstone for around $675 million in cash, according to a report in the Wall Street Journal. HNA has been trying for more than one year to find a buyer for Pactera, with news of the potential disposal having gone quiet since March.
HNA Sell Off Continues
CWTI’s latest sale suggests that HNA’s liquidity challenges persist more than a year after the company that was once at the forefront of China’s acquisition binge began to liquidate assets in the US, Europe and Greater China to cope with debts which in mid-2018 were estimated at $100 billion.
In July of this year HNA sold its remaining 75.10 percent stake in a Beijing commercial complex to a subsidiary of China Vanke for a total consideration of RMB 1.3 billion, and the company has also been making moves to sell other assets.
Last month, HNA sold its 92.86 percent interest in a fund holding a stake in Tishman Speyer’s the Spiral project to HNA Investment Group for a total consideration of RMB 1.4 billion ($200 million).
Just three months ago, HNA put a pair of hotels up for sale – one in Shanghai and another in Hainan – for a combined RMB 2.7 billion.