HNA Stymied in Attempt to Sell Out of $8.5 Billion Plane Lessor

(Bloomberg) -- HNA Group Co. has been stymied in an attempt to sell out of plane lessor Avolon Holdings Ltd., in what would have been one of the indebted Chinese conglomerate’s biggest divestments to date as it unwinds a global deal spree, people with knowledge of the matter said.

HNA reached out to Orix Corp. in the past few months to gauge the Japanese financial group’s interest in buying its remaining 70% stake in Avolon, according to the people. Orix decided in the end that it wasn’t interested in pursuing a deal, the people said, asking not to be identified because the information is private.

The Chinese group has been seeking a valuation of about $8.5 billion for Avolon, representing about 1.1 times book value, the people said. Orix bought 30% of Dublin-based Avolon for $2.2 billion last year.

Pursuing a large acquisition like a takeover of Avolon could have put pressure on Orix’s credit rating. While HNA isn’t currently in any active sale talks, it could still decide to approach other buyers for the business or make another attempt to engage with Orix, the people said.

A representative for HNA declined to comment. Orix didn’t discuss raising its stake in Avolon nor is it considering to do so, said Yuka Kanaoka, a Tokyo-based spokeswoman for Orix.

“We are very happy with the current 30% investment,” she said.

Selling out of Avolon would have been HNA’s biggest disposal since it unloaded a $6 billion stake in Hilton Worldwide Holdings Inc. in 2018. The attempt highlights how HNA’s liquidity challenges persist more than a year after soaring debts forced the company to begin dumping tens of billions of dollars in assets.

As to Hainan-based HNA, once the biggest shareholder of the likes of Deutsche Bank AG and Hilton, it continues to pursue asset sales. The group is said to be in talks to sell a $4 billion stake in technology firm Ingram Micro Inc. HNA is also considering reviving the sale of its container-leasing business Seaco, people familiar with the matter said last month.

©2019 Bloomberg L.P.

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