Debt-laden Chinese conglomerate HNA Group might have its stake in Swissport International wiped out under a plan to inject rescue financing into the beleaguered airport cargo handling company.
A group of senior secured creditors, including Apollo Global Management and SVP Global, have made an offer to restructure €2 billion (US$2.4 billion) worth of Swissport’s debt in return for equity, according to a person familiar with the matter.
The group of creditors holds €1.4 billion of Swissport’s senior secured debt and has committed to investing in the company to help it through a collapse in international travel caused by the coronavirus pandemic.
Get the latest insights and analysis from our Global Impact newsletter on the big stories originating in China.
Holders of Swissport payment-in-kind notes, which pay out in additional bonds rather than cash, have agreed to the plan devised by the senior secured creditors, the person said.
A spokesman for Swissport said the company has been in discussions with lenders and investors since the early phase of the global Covid-19 related market collapse. “We have been exploring several possible options to raise additional liquidity and to put Swissport on a stable financial foundation for the long term. These discussions are still ongoing and there has been significant and tangible progress,” he said.
In April, Swissport, the world’s largest provider of airport ground services and air cargo handling, said it had 40,000 employees on furlough, or other state-supported programmes such as short-time work. The company made 10,000 employees redundant, leaving under 15,000 of its formerly 64,000-strong staff on active duty at the time.
Headquartered near Zurich Airport, Swissport services flights at 300 airports in 50 countries. Ratings agency Moody’s estimated on June 9 that significantly lower traffic will result in negative free cash flow of around half a billion euros this year.
About 80 per cent of Swissport’s revenue is linked to the number of flights it services, and the remaining 20 per cent is generated from cargo handling, which is also depressed due to lower economic activity and supply chain disruption. The company had €350 million cash as of May.
HNA itself is struggling for survival, having been made a state ward after Chinese authorities took over its management in February. The Hainan-based group has been trying to sell Swissport after its international expansion unravelled spectacularly.
It is unclear if HNA, which bought Swissport for CHF2.73 billion (US$2.73 billion) in 2015 amid a global debt-funded acquisition spree, has responded to the senior secured creditors’ offer. A spokesman for HNA declined to comment immediately when approached about the debt restructuring offer.
Additional reporting by Iris Ouyang
Purchase the 120+ page China Internet Report 2020 Pro Edition, brought to you by SCMP Research, and enjoy a 30% discount (original price US$400). The report includes deep-dive analysis, trends, and case studies on the 10 most important internet sectors. Now in its 3rd year, this go-to source for understanding China tech also comes with exclusive access to 6+ webinars with C-level executives, including Charles Li, CEO of HKEX, James Peng, CEO/founder of Pony.ai, and senior executives from Alibaba, Huawei, Kuaishou, Pinduoduo, and more. Offer valid until 31 August 2020. To purchase, please click here.
More from South China Morning Post:
- HNA Group’s American subsidiaries asked, and received, bailout funds from US government’s relief programme
- HNA Group risks losing Swissport as distressed funds initiate debt restructuring for rescue financing
- HNA Group halts trading of its note in Shanghai as a hasty plea for time caused panicking investors to flee its debt issues
This article Senior creditors said to have offered to take control of Swissport from China’s HNA Group first appeared on South China Morning Post