HNA's proposed $567m Global Eagle deal falls apart

BEIJING • HNA Group's proposed US$416 million (S$567 million) investment in a US in-flight entertainment and Internet-services provider collapsed after the two firms failed to get regulatory approval from the United States, in the latest setback for the acquisitive Chinese group.

The plan, in which HNA's Beijing Shareco Technologies would invest in Los Angeles-based Global Eagle Entertainment, was terminated after failing to obtain the go-ahead from the US Committee on Foreign Investment, Global Eagle said in a US regulatory filing on Tuesday. The investment was announced last November.

The group, which started with a regional airline in the southern Chinese island of Hainan, has been on a buying spree, taking on at least US$73 billion of debt as it transformed into a global conglomerate with holdings including stakes in Hilton Worldwide Holdings and Deutsche Bank.

But it has come under mounting scrutiny in China, the US and Europe over some of its purchases.

US officials are said to be reviewing HNA's purchase of SkyBridge Capital, the hedge-fund firm founded by White House communications director Anthony Scaramucci, while the European Central Bank is considering a review of the company's stake in Deutsche Bank, and Chinese regulators are assessing the risks posed by HNA and other active acquirers to the country's financial system.

Some of the biggest US and Chinese banks have distanced themselves from the firm, people familiar with the matter have said, though HNA denies that is the case.

HNA has announced more than US$40 billion of deals since the beginning of last year. Its pending transactions include the planned takeovers of Singapore-based logistics firm CWT, Glencore's oil storage business, a majority stake in Brazilian airport operator Rio de Janeiro Aeroportos SA and Australia and New Zealand Banking Group's UDC Finance.

Shareco representatives did not immediately reply to queries.

On Monday, Shareco filed a statement on China's National Equities Exchange and Quotations that it decided to terminate a "material asset restructuring" transaction, without naming Global Eagle.

Shareco and Global Eagle will continue to cooperate under an existing commercial agreement for the US firm's provision of equipment and services for in-flight entertainment and connectivity to Hainan Airlines, Beijing Capital Airlines and Yangtze River Airlines, according to the filing.

HNA has been under pressure lately. It was among several prolific Chinese acquirers of foreign assets - the others being Fosun International, Dalian Wanda Group, Anbang Insurance Group and the buyer of the AC Milan soccer club - whose loans have been under the scrutiny of the country's banking regulator.

BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on July 27, 2017, with the headline 'HNA's proposed $567m Global Eagle deal falls apart'. Print Edition | Subscribe