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Refinancing looms for HNA's Hong Kong projects

09/14/2017| 11:23:12 AM|

HNA needs to refinance the short-term loans it used for its purchases, which start coming due in November, and to actually build the towers that will lure high-end buyers and start generating money.

At least four out of eight banks known to have provided a combined USD 1.5 billion worth of short-term financing for the land purchases to HNA’s units have decided not to renew that credit and don’t intend to extend fresh loans to fund construction costs, according to people with knowledge of the matter who asked not to be identified discussing confidential client relationships. Three of the banks haven’t yet decided and will base their decisions on the terms negotiated, according to people familiar with the discussions.

The first repayment deadline HNA faces is in November, when HK$3.5 billion (USD 448 million) in debt comes due. Two of the three lenders who made those loans have decided not to refinance them, the people said. The rest of the short-term loans on the project are due in January, February and June.

HNA plans in 2019 to start pre-sales for the apartments to be built there, according to filings to the Hong Kong exchange. Estimated costs for construction will total more than HK$10 billion, according to a disclosure to shareholders by HNA’s local property developing unit Hong Kong International Construction Investment Manage Group Co.

If HNA can’t get bank financing to complete the project, it could be forced to turn to private investors for funding or decide to resell the plots, analysts said.

"HNA might need to give up at least part of it," said Chen Shujin, a Hong Kong-based analyst at Huatai Securities Co.

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TAGS: HNA | financing
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