Virgin Australia Ltd's market capitalisation has collapsed since listing.
China's HNA owns a 19.85% stake in Virgin. HNA has been in financial trouble for quite some time, and is in the process of being taken over by the Chinese Government.
Virgin seeks an Australian Government cash bail-out, when it should instead seek funding from its shareholders, including HNA. To put this in another way, the Australian Government is being asked to take the risk that Virgin's major shareholders are not prepared to take.
Nanshan of China also owns about 20% of Virgin, and appears to have strong Communist Party links.
Nanshan founder Song Zuowen was the man who took the company from nothing to what it is today. At one stage, he was both the chair of Nanshan (he has since stepped down in favour of his son) and Communist party head of Nanshan the village. That is highly unusual in China. Nanshan Group basically was the government in Nanshan. Supplied
END
Will Willitts
Online editor
Mar 2, 2020 – 1.39pm
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China plans to take over HNA Group and sell off its airline assets as the coronavirus outbreak has hit the Chinese conglomerate's ability to meet financial obligations, Bloomberg has reported.
China has begun assuming control of debt-laden HNA Group, which has a 19.85 per cent stake in Virgin Australia, as Beijing tries to soften the blow from the coronavirus' hit to the national economy, Bloomberg reports.
Virgin Australia shares closed at a record low last Tuesday, but were up 4.8 per cent at midday at 11¢ a share. Glenn Hunt
At the weekend, the Hainan provincial government appointed new leaders for HNA and "assuming management of its liquidity risks is tantamount to China declaring it’s taking over decision making at the group", the news agency cited people familiar with the matter as saying.
"State authorities will now go through HNA’s books to figure out how to sell off the group’s assets and pay off debt," Bloomberg reported.
"HNA said the move doesn’t translate to a takeover and doesn’t involve changes in the controlling shareholder. A representative for HNA didn’t immediately respond to requests for further comment," Bloomberg reported.
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Virgin Australia shares closed at a record low last Tuesday, but were up 4.8 per cent at midday at 11¢ a share. The major shareholders in Australia's second-biggest carrier also include Etihad Airways, Singapore Airlines, Nanshan Group and Richard Branson's Virgin Group.
HNA's travel business has been so "decimated" by the coronavirus outbreak that Beijing has concluded "the Hainan-based group wouldn’t be able to avert collapse without state intervention". HNA has debt totalling some $US75 billion ($115.2 billion).
“What’s happening to HNA is just the tip of the iceberg of what’s coming for a lot of companies in China," Bloomberg quoted Warut Promboon, managing partner at credit research firm Bondcritic, as saying.
HNA owns several carriers including its flagship Hainan Airlines. About 80 per cent of China flights have been halted because of the coronavirus outbreak, and the Montreal-based International Air Transport Association (IATA) estimates the epidemic will cost the global industry about $US30 billion in lost revenue, the report said.
Mar 2, 2020 – 1.39pm
Save
Share
China plans to take over HNA Group and sell off its airline assets as the coronavirus outbreak has hit the Chinese conglomerate's ability to meet financial obligations, Bloomberg has reported.
China has begun assuming control of debt-laden HNA Group, which has a 19.85 per cent stake in Virgin Australia, as Beijing tries to soften the blow from the coronavirus' hit to the national economy, Bloomberg reports.
Virgin Australia shares closed at a record low last Tuesday, but were up 4.8 per cent at midday at 11¢ a share. Glenn Hunt
At the weekend, the Hainan provincial government appointed new leaders for HNA and "assuming management of its liquidity risks is tantamount to China declaring it’s taking over decision making at the group", the news agency cited people familiar with the matter as saying.
"State authorities will now go through HNA’s books to figure out how to sell off the group’s assets and pay off debt," Bloomberg reported.
"HNA said the move doesn’t translate to a takeover and doesn’t involve changes in the controlling shareholder. A representative for HNA didn’t immediately respond to requests for further comment," Bloomberg reported.
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Virgin Australia shares closed at a record low last Tuesday, but were up 4.8 per cent at midday at 11¢ a share. The major shareholders in Australia's second-biggest carrier also include Etihad Airways, Singapore Airlines, Nanshan Group and Richard Branson's Virgin Group.
HNA's travel business has been so "decimated" by the coronavirus outbreak that Beijing has concluded "the Hainan-based group wouldn’t be able to avert collapse without state intervention". HNA has debt totalling some $US75 billion ($115.2 billion).
“What’s happening to HNA is just the tip of the iceberg of what’s coming for a lot of companies in China," Bloomberg quoted Warut Promboon, managing partner at credit research firm Bondcritic, as saying.
HNA owns several carriers including its flagship Hainan Airlines. About 80 per cent of China flights have been halted because of the coronavirus outbreak, and the Montreal-based International Air Transport Association (IATA) estimates the epidemic will cost the global industry about $US30 billion in lost revenue, the report said.
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