Wang death casts cloud over HNA direction, hits bonds

The chairman of HNA Group was the mastermind behind the once-acquisitive firm.

HNA Group-linked bonds came under pressure on Wednesday as a question mark was placed over the future direction of the once-acquisitive Chinese conglomerate following news of the death of Jian Wang, its co-founder and chairman.

Wang, 57 years old, died on Tuesday from a fall during a business trip to France, the company said in a statement on its website. No further details were provided.

A spokesman for HNA Group, which changed its website to grey in a gesture of grief, did not immediately respond to FinanceAsia's requests for comment.

Wang's sudden death comes as the debt-saddled group offloads assets around the world to arrest its liquidity problems after the authorities in Beijing last year tightened outbound acquisitions made by domestic companies.

The company's outstanding dollar bonds reacted negatively as the news filtered through to the market, with some debt investors speculating about a new wave of personnel changes in the wake of the unexpected death.

According to market data, the group's 8.875% November 2018 bonds dropped by 2.5 points to 96.75, while those of Hainan Airlines -- a key HNA holding -- fell by 1.5 points to 98.25. 

"We will have to see how HNA will rejig its management team," said a Hong Kong-based fund manager who had met Wang previously during an investor meeting. "Mr Wang was a respected figure in the investment community for his knowledge and achievement."

For creditors and lenders, the sudden death of Wang highlights the need to develop a transparent disclosure system to distribute financial information.

"Losing a key individual is a serious risk for organisations that are reliant on a small group of executives," another fund manager in Singapore said. "In China, the key-man risk is probably more palpable than in other countries due to its corporate culture."

According to a person familiar with HNA Group’s thinking, Wang’s sudden death delivers a blow to the aviation-to-finance conglomerate, as he oversaw the group’s capital management and financing activities.

“Mr. Wang was a quintessential manager of corporate finance and risk management, particularly in regard to his deep understanding of capital markets and investor relations,” the person said on condition of anonymity because he is not allowed to talk to the press. “He was a mild-mannered manager who had deeply impacted the culture and scale of HNA.”  

A former civic aviation official and a devoted Buddhist, Wang founded Hainan Airlines with his long-time business partner Feng Chen in early 1993 and in the past few years transformed the small airline carrier to be a global powerhouse of logistics to finance. Wang owns about 15% of HNA Group, public filings show. Wang and Chen share the titles of co-founder and chairman. 

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