China: Hainan Airlines cleared to take $567 million syndicated loan


Hainan Airlines’ board has approved a proposal to take a CNY 4billion (US$567million) loan from a syndicate of eight Chinese state-owned banks.

The loan will have a three-year tenure and two-year grace period. Its interest rate is fixed at 4.75% per annum. Funds raised will be used to finance the operations of carriers within the HNA Group, says Hainan Airlines in its Shanghai Stock Exchange disclosure.

China Development Bank is acting as the deal’s lead and correspondent bank. China Exim Bank, Bank of China, Agricultural Bank of China, ICBC, China Construction Bank, Postal Savings Bank of China, and Bank of Communications are members of the syndicate.

The eight banks have agreed to contribute CNY500 million each.

HNA Group is serving as guarantor. Hainan Airlines says the loan is meant to “promote a stable development” of its operations and minimise risks while it builds its aviation focus and improves operating performance.

The airline adds that the loan will be used in various ways: to pay for aviation fuel, for example, and for operating expenses such as salaries, as well as leases, both at Hainan Airlines and at affiliated carriers.

It is unclear if any of the funds will go to troubled sister carrier Hong Kong Airlines, which is faced with imminent closure if it does not raise enough cash to continue operations.

Hainan’s move to take the loan comes days after the airline raised CNY1 billion from an ultra-short-term bond issuance conducted on 29 November. Those funds will be used to repay existing debt. (Source: FlightGlobal)

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