China's HNA pulled its second initial public offering in two weeks. The move begs the question of how the heavily-indebted conglomerate will ease its credit burden.
Swissport, an aviation handling firm, said it would postpone a planned public listing that would have raised roughly 2.7 billion Swiss francs ($2.81) for owner HNA, in a statement on Tuesday. The Chinese conglomerate is in desperate need of funds to help alleviate its debt burden from a billion-dollar spending spree, including gorging on Deutsche Bank shares.
«Swissport Group will defer the planned initial public offering and listing of its shares on the SIX Swiss Exchange due to current market conditions,» the Zurich-based company said in a brief statement on its website.
It is the second firm controlled by HNA to yank an IPO in Switzerland due to market conditions: two weeks ago, HNA said it wouldn't list Gategroup, effectively admitting the capital market wouldn't give it what the Chinese conglomerate feels the airline caterer is worth.
HNA vs Market's View
HNA's reasoning for scrapping the two listings - market conditions and valuation - come as several other firms including medtech firm Medartis and Sensirion, which manufactures sensors, successfully tap the Swiss market.
The second withdrawal by HNA amid an otherwise flourishing Swiss capital market raises concerns that the Chinese conglomerate, and not the market, is the bigger issue.
HNA's decision to pull Gategroup may have made potential Swissport investors skittish, the «Financial Times» reported. The paper said potential investors had been «wary» to invest alongside the debt-heavy conglomerate, but bankers running the deal told the paper the issue was more of price.
Deutsche Move?
The Chinese firm ran afoul of Swiss overseers in its acquisition of Gategroup, and was sanctioned verbally. The FT estimates that it has $20 billion in debt maturing this year - meaning it needs to pull money out of a hat, soon. HNA didn't endear itself to potential Swissport investors by assuring the market that the listing remained on track, after it pulled the Gategroup IPO.
In the past, HNA's 8.8 percent stake in Deutsche Bank has been touted as a potential asset sale, something the Chinese firm has denied. It is unclear what HNA thinks of the sudden exit of CEO John Cryan this week, or his replacement with a veteran German retail banker, Christian Sewing.
Until now, HNA has sold some luxury real estate including in New York and Australia, as well as renegotiated some debt, but is expected to need to raise more cash soon.
