Analyses
HNA plans to sell $1.4 billion stake in Park Hotels
In debt, the Chinese group could sell 25% of its stake in Park Hotels.
HNA Group has put its $1.4B (1.1B€) stake in Park Hotels & Resorts up for sale. The sale could concern some or all of the 53.7 million shares of HNA (46.5M€).
HNA bought a quarter of Hilton Worldwide and two spin-offs - Park Hotels and Hilton Grand Vacations - from the Blackstone group last year for approximately $6.5B (€5.2B). This interest is now estimated at over $9B (7.3B€).
According to Bloomberg's data, the latest closing of Park Hotels at $25.93 (€21.06) is similar to what HNA got the shares for less than a year ago. The value of HNA's stake in Hilton Worldwide has soared about 40% to $6.6B (5.3B€) - but these shares are frozen until 2019 - and Grand Vacations is up 58% to $1.1B (893M€).
The move comes as the airline operator is actively seeking to dispose of assets globally to repay debts after it spent tens of billions dollars in a debt-fueled buying spree. In January 2018, the group talks about a liquidity shortfall of at least 15 billion yuan (1.9B€) this quarter and says it’s targeting about 100 billion yuan in asset sales (12.8B€) during the first half of the year.
Park Hotels' real estate portfolio includes Hilton San Francisco Union Square and New York Hilton Midtown. Park Hotels could be HNA's biggest sale of shares. In recent weeks, the conglomerate has put its 29% stake in NH Hotel Group up for sale.
Recently, the NH Hotel Group has mentioned that it doesn't want a rival hotel group to take over this participation.
“We have been monitoring the situation very closely and have been approached by several potential buyers for all or part of the stake,” Alfredo Fernandez Agras, co-chairman of NH.
He also stated that NH was waiting to hear "from investors that want to add value and are willing to participate in the evident consolidating industry trends," but that NH would not welcome "an industrial hotel operator as minority investor" as this would "constrain our future strategic options."
Before HNA outlined its plans, Barceló made an offer to merge the two companies, but NH had rejected its offer. It would therefore seem that another hotel group would take almost a third of its business, which would make a larger takeover, merger, or acquisition much more difficult.
“I can only say you that the different parties we’ve met are parties that will be very interested [in] growing the company farther and [creating] additional value and that they see NH as a group platform to grow [...]” Fernandez Agras said. “I cannot add more. We are the subject of a transaction, the seller is HNA. They control the timing and who ultimately would buy the stake.”
Other assets the company is planning to sell or has sold include Red Lion Hotels, the U.S. shipping company Dorian and China Dragon Securities. Meanwhile, the group is planning initial public offerings for Gategroup and Swissport International.
Significant investments include:
- DEUTSCHE BANK: HNA’s 9.9 percent stake makes it the largest shareholder of Europe’s largest bank.
- CIT: In 2016, HNA agreed to buy CIT Group’s aircraft-leasing business for $10 billion to create the world’s third-largest rental fleet.
- REAL ESTATE: HNA is building a luxury development in the land near Hong Kong’s former airport that it bought for $3.5B (2.8B€).
- OTHERS: The group also owns 21% of Dufry, 25% of OM Asset Management and 19% stake in Vrgin Australia.
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