Chinese conglomerate HNA's US$416m investment deal blocked by Washington

The HNA Group logo is seen in this illustration photo on June 1, 2017.
The HNA Group logo is seen in this illustration photo on June 1, 2017. PHOTO: REUTERS

BEIJING (BLOOMBERG) - HNA Group's planned US$416 million (S$567 million) investment in an in-flight entertainment and Internet-services provider collapsed after the two companies failed to get US regulatory approval, in the latest setback for the deal-hungry Chinese group.

The proposal for HNA's Beijing Shareco Technologies to invest in Global Eagle Entertainment Inc was terminated after failing to obtain the go-ahead from the Committee on Foreign Investment in the United States (CFIUS), Global Eagle said in a regulatory filing late on Tuesday (July 25). The investment was announced in November.

The Chinese 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 from a small regional carrier into a global conglomerate with holdings including stakes in Hilton Worldwide Holdings and Deutsche Bank. More recently, the company has been under mounting scrutiny in China, the US and Europe over some of its purchases.

Shareco and Global Eagle will continue to cooperate under an existing commercial agreement for the US company'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.

Global Eagle was going to invest up to US$150 million in a joint venture, which will provide in-flight entertainment services to HNA's airlines, under the deal announced last year.

Another HNA deal - the purchase of the firm founded by incoming White House communications director Anthony Scaramucciis - is undergoing a regulatory review by the CFIUS, according to a CNN report on Tuesday.

SkyBridge Capital agreed in January to sell itself for an undisclosed price to HNA. The deal was struck as Mr Scaramucci, who founded the hedge fund network in 2005, was preparing to join the Trump administration in a different role.

The SkyBridge sale was expected to close at the end of June, but it is still pending "regulatory approvals", a SkyBridge Capital spokesman told CNN. "The close is proceeding as planned," the spokesman said, adding that SkyBridge is "confident" it will close this summer.