SYDNEY • China's debt-saddled HNA Group cancelled its A$280 million (S$282 million) purchase of an Australian logistics business yesterday, with the seller citing cash-flow problems among reasons for the deal's collapse.
HNA's unsolicited offer for the refrigerated trucking arm of Automotive Holdings Group (AHG) landed last November, at the tail end of the firm's US$50 billion (S$68.4 billion) two-year acquisition spree and just as concerns about its financing costs began to surface.
The unwinding of the offer, which included HNA assuming an additional A$120 million in debt on top of the purchase price, comes as those worries have intensified and as HNA has been offloading global assets to settle its debts.
"Unfortunately... HNA has run into liquidity problems which, combined with the delayed Firb process, left the conditions precedent unable to be satisfied," said AHG managing director John McConnell, referring to Australia's Foreign Investment Review Board.
Last week, AHG had said it was still in talks with HNA, including discussing an HNA request for funding support, but Mr McConnell said those talks had ended.
AHG's shares slumped 10 per cent to a six-year low, while the broader market rose.
"They still need to sell it and there's no one like the Chinese to pay up for stuff, and it looks like they are off the market," said portfolio strategist Mathan Somasundaram of Blue Ocean Equities.
Investors had hoped the proceeds would be reinvested in growth or returned to them via dividends or share buyback, he added.
HNA, best known as the owner of Hainan Airlines, is unloading assets and shareholdings - having agreed to sell US$10 billion in real estate this year, along with stakes in Deutsche Bank and Hilton Worldwide Holdings.
Capital control restrictions placed by Chinese regulators in recent years have also been weighing on HNA's deal activity.