• Tag Archives Hilton Worldwide
  • To Avoid Liquidation Panic, HNA Assures Deutsche Shareholders It’s A “Long-Term Investor”

    The notoriously acquisitive Chinese conglomerate HNA – which recently had a sharp falling out with Beijing resulting in a margin call “shocksave” – is facing a serious cash crunch in 2018 as nearly a quarter of its $100 billion in debt – a large chunk of which was accumulated during a multi-year buying spree that saw it become a major shareholder in Deutsche Bank, Hilton Worldwide and a large portfolio of international holdings – comes due.
    But even as the company resorted to loaning out shares and entering into arcane derivative financing agreements to finance its debt-service payments, it is quickly finding that traditional avenues of financing are disappearing or becoming too costly.
    Despite being one of China’s largest conglomerates, HNA has been shut out of stock and bond markets as lenders worry about its outsized debt load, forcing the company to pledge some of its core holdings as collateral for short-term loans, as the Wall Street Journal reported earlier this month.
    This has forced the conglomerate to explore other options. To wit, the bank recently pledged some of its Deutsche Bank shares to UBS as collateral for a loan worth roughly $117. It also executed an options strategy known as a collar. This strategy involves purchasing out-of-the-money puts to protect against a large drop in the stock while simultaneously selling out-of-the money calls to offset the cost of the puts.
    On Dec. 20, HNA’s unit entered into a new series of collar transactions with Swiss bank UBS Group AG, and pledged its Deutsche Bank shares to UBS in exchange for a total of 2.36 billion euros (US$2.8 billion) in net financing. It also has a margin loan from UBS and ICBC Standard Chartered PLC. In all, the new total amount of financing was about 99 million euros (US$117.6 million) higher than what was disclosed in a similar filing in May.

    This post was published at Zero Hedge on Dec 27, 2017.


  • China Systemic Risk: Liquidity Problem Surfaces At HNA Group Less Than Two Weeks After Company’s Denial

    Here we go again…
    On December 8, we lamented how every few days we return to the subject of systemic risk in China related to its big four highly-indebted conglomerates, HNA, Anbang, Evergrande and Dalian Wanda. We also noted how our chief source of concern had become HNA, after it issued a bond with less than one year to maturity with the extortionately high coupon of 9%. And S&P downgraded HNA’s credit rating from b+ to b, five levels below investment grade. The reason for our continuing focus on HNA is its $28bn of short-term debt which matures before the end of next June, much of it accumulated during a $40 billion binge of acquisition-driven growth which saw it become a major shareholder in Deutsche Bank, Hilton Worldwide and others.
    In our update less than two weeks ago, we noted how HNA business units had suffered further credit downgrades and been forced into cancelling bond issues. For example, Hainan Airlines cancelled a 1 billion yuan ($151.2 billion) issue of perpetual bonds to repay maturing debt, HNA Investment Group (hotels and real estate) cancelled a 5.22 billion yuan ($790 million) issue and S&P cut the long-term credit rating of HNA’s Swissport Group Sarl to b-, six levels below investment grade, citing concerns about its parent.

    This post was published at Zero Hedge on Dec 18, 2017.


  • China Systemic Risk: HNA Group Denies Liquidity Problem, It’s Only “End-Of-The-Year Tightness”

    Every few days at the moment, it seems, we return to the subject of systemic risk in China related to its big four highly-indebted conglomerates, HNA, Anbang, Evergrande and Dalian Wanda.
    Our main source of concern recently has been HNA, after it issued a bond with less than one year to maturity with the extortionately high coupon of 9%. This prompted us to ask whether China was experiencing the beginning of its Minsky moment? The reason for our continuing focus on HNA is its $28bn of short-term debt which matures before the end of next June, much of it accumulated during a binge of acquisition-driven growth which saw it become a major shareholder in Deutsche Bank, Hilton Worldwide and others.
    Last week, as we discussed, S&P downgraded HNA’s credit rating by one notch from b+ to b, five levels below investment grade. in another sign that HNA is under pressure from the Chinese government and its creditors, CEO Adam Tan announced that it was ditching its acquisitive strategy, while considering the IPO of Gategroup, a company it only acquired last year for $1.5 billion.

    This post was published at Zero Hedge on Dec 8, 2017.


  • China: Systemic Risk Surges As HNA’s High Coupon Borrowing Binge Accelerates

    In early November 2017, we returned to one of our favourite subjects, systemic risk in China related to its big four highly-indebted conglomerates, HNA, Anbang, Evergrande and Dalian Wanda. In particular, we asked whether the extortionately high coupon of 9% on an HNA dollar bond issue, with less than one year to maturity, marked the beginning of China’s Minsky moment? As we noted at the time, HNA has $28 billion of short-term debt maturing before the end of June 2018, much of it accumulated during an acquisition binge over the last two years, which has seen it become a major shareholder in companies such as Deutsche Bank AG and Hilton Worldwide Holdings.
    Speaking to Bloomberg at the time, Warut Promboon, managing partner at credit research firm, Bondcritic, noted…
    ‘Nine percent is really high for one year. Basically, it tells you that the worry is real.”
    In a sign that HNA is under pressure, both from the Chinese government and its creditors, CEO Adam Tan announced last week that the company was reversing its previous strategy. From Reuters.
    HNA Group CEO Adam Tan said the acquisitive company is making adjustments to conform with national policies, and has sold some investments and real estate projects to improve its liquidity, domestic media reported on Tuesday.

    This post was published at Zero Hedge on Dec 4, 2017.


  • “A Reverse Rollup From Hell”: China’s “Boldest Dealmaker” Faces Margin Call Disintegration

    One month ago, when describing the bizarre, not to mention systemically dangerous practice of dozens of small and mid-cap Chinese companies and executives offering to backstop losses on their employees’ purchases of company shares, we couldn’t quite explain it, although it seemed to revolve around a simple, and fraudulent, ponzi scheme: the same executives who were making the “make whole guarantee” had themselves taken out substantial loans collateralized by a pledge on their own stock. Naturally, the lower the stock dropped, the closer the moment when the dreaded margin call would come in demanding loan repayment, and since the value of the stock used as collateral was below the value of the loan, defaults would inevitably follow. As such, the “offer” to backstop losses was nothing more than a last ditch effort to find the greatest fool of all: an employee who believed that the sinking ship known as his or her employer would bail them out, when in reality it was the other way round. Oh, and good luck, trying to collect on your “guarantee”, when both the company and the executive were in bankruptcy court, or worse.
    We bring it up because in a report overnight, Bloomberg has uncovered that while the practice of backstopping corporate stock purchases may – for now – be limited to a subset of potentially fraudulent companies (our advice is to create a short basket of all the companies that engaged in this practice listed here and watch them sink), pledging shares is not. In fact quite the opposite: as it turns out, one of China’s most acquisitive companies, HNA Group which Bloomberg dubbed “China’s boldest dealmaker” which “supercharged its transformation from an obscure Chinese airline operator to a juggernaut capable of amassing multibillion-dollar stakes in globally recognized brands, including Hilton Worldwide Holdings Inc. and Deutsche Bank ” had pledged billions of its own shares as a source of funding for these purchases.
    And herein lies the rub: as we said one month ago, “fundamentally a ponzi scheme, this works without a glitch during rising markets but falling prices especially among small and mid-cap companies, have eroded the value of that collateral, raising the specter of forced liquidation – where lenders, often Chinese brokerages, make borrowers sell the pledged shares. Selling the stock adds more pressures on share prices, triggering a downward spiral.”

    This post was published at Zero Hedge on Jul 13, 2017.


  • China’s HNA Group Acquires 25% Stake In Hilton For $6.5 Billion

    Last night when we discussed the latest acquisition by the Chinese financial conglomerate China Oceanwide of Genworth we said that “Should the deal close, it will likely unleash a surge of more Chinese acquisitions of questionable US companies, leading to even more short squeezes on concerns that the “Chinese are coming.” We didn’t have long to wait: moments ago another Chinese conglomerate, HNA Group, announced it had acquired a 25% equity stake in Hilton Worldwide Holdings from Blackstone for $6.5 billion, or $26.25 in cash.
    The deal represents a ~15% premium to HLT’s last close $22.91 and reduces Blackstone’s interest in Hilton to ~21%. Blackstone will keep 2 seats on HLT board, including Jon Gray who will remain chairman. According to Bloomberg, HNA will enter into a stockholders pact with HLT, and into similar agreements with Park Hotels & Resorts and Hilton Grand Vacations, effective upon closing. The deal allows HNA to appoint 2 directors (1 HNA member, 1 independent member) to HLT’s board, bringing total to 10 members.
    Furthemore, HNA agrees to some restrictions on selling stake for 2 yrs, and will vote shares in excess of 15% proportionally with holders.

    This post was published at Zero Hedge on Oct 24, 2016.


  • China Ocean Freight Indices Plunge to Record Lows

    There’s simply no respite. Money is leaving China in myriad ways, chasing after overseas assets in near-panic mode. So Anbang Insurance Group, after having already acquired the Waldorf Astoria in Manhattan a year ago for a record $1.95 billion from Hilton Worldwide Holdings, at the time majority-owned by Blackstone, and after having acquired office buildings in New York and Canada, has struck out again.
    It agreed to acquire Strategic Hotels & Resorts from Blackstone for a $6.5 billion. The trick? According to Bloomberg’s ‘people with knowledge of the matter,’ Anbang paid $450 million more than Blackstone had paid for it three months ago!
    Other Chinese companies have pursued targets in the US, Canada, Europe, and elsewhere with similar disregard for price, after seven years of central-bank driven asset price inflation [read… Desperate ‘Dumb Money’ from China Arrives in the US].
    As exports of money from China is flourishing at a stunning pace, exports of goods are deteriorating at an equally stunning pace. February’s 25% plunge in exports was the 11th month of year-over-year declines in 12 months, as global demand for Chinese goods is waning.

    This post was published at Wolf Street on March 14, 2016.


  • Chinese Insurance Company Which Bought Waldorf Astoria Submits “Hostel Bid” For Marriott Hotels

    The “hostel takeover” saga for Starwood Hotels took another unexpected turn this morning, when the company’s stock price soared following news that the hotel chain had received an unsolicited $76/share non-binding proposal (8% premium to the Friday close) from an investor group led by China’s Anbang Insurance Group, in a deal that seeks to scuttle its planned combination with Marriott International. The proposed deal values Starwood, one of the world’s largest hotel companies which includes such brands as Westin, Sheraton, The Luxury Collection, W Hotels, St. Regis, Le Meridien and many others, at $12.8 billion.
    Early on Monday Marriott issued a press release announcing it was still committed to the proposed tie-up with Starwood, said the consortium was led by Anbang, which in October of 2014 struck a deal to buy Hilton Worldwide Holdings Inc.’s flagship hotel, the historic Waldorf Astoria in Manhattan, for $1.95 billion. To wit:
    On March 11, 2016 Starwood notified Marriott that it had received an unsolicited indication of interest in purchasing Starwood from a consortium of potential investors, led by Anbang Insurance Group. Marriott notes that this unsolicited indication of interest is highly conditional and non-binding. Marriott granted Starwood a waiver to expedite its evaluation of the letter from the interested consortium.

    This post was published at Zero Hedge on 03/14/2016.


  • New York’s Waldorf Astoria to be sold for $1.95 billion to Chinese insurance company

    Hilton Worldwide is selling the Waldorf Astoria New York to Chinese insurance company Anbang Insurance Group Co. for $1.95 billion.
    Hilton Worldwide will continue to manage the storied hotel for the next 100 years as part of an agreement with Anbang.
    The Waldorf Astoria New York has restaurants including Peacock Alley, Bull and Bear Prime Steakhouse and Oscar's. The companies said Monday that the property will undergo a major renovation. 
    In March 1893, millionaire William Waldorf Astor opened the 13-story Waldorf Hotel. The Astoria Hotel opened four years later. The Waldorf Astoria New York, on Park Avenue in Manhattan, opened in 1931, according to the company's website. At the time it was the largest hotel in the world. The hotel became an official New York City landmark in 1993.

    This post was published at India Times