China began assuming control of debt-laden HNA Group, paving the way for a hastened selloff of the once-sprawling conglomerate’s remaining assets after it became one of the biggest corporate casualties of the coronavirus outbreak. HNA-related shares rose.
Saturday’s announcement that the Hainan provincial government appointed new leaders atop HNA and is assuming management of its liquidity risks is tantamount to China declaring it’s taking over decision making at the group, according to people familiar with the matter, who asked not to be named discussing private deliberations. State authorities will now go through HNA’s books to figure out how to sell off the group’s assets and pay off debt, they said.
Though it’s been under financial strain since late 2017, HNA’s main travel business was decimated by the virus epidemic, leading Chinese authorities to conclude that the Hainan-based group wouldn’t be able to avert collapse without state intervention, the people said.
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