China's HNA Group Co Ltd, the heavily indebted aviation-to-financials conglomerate, plans to sell some or all of its $6.3 billion stake in Hilton Worldwide Holdings Inc, underlining its need to shed assets and tackle a cash crunch.
The sale, announced on Thursday (April 5) through a regulatory filing with the U.S. Securities and Exchange Commission, comes about a year and a half after HNA bought a 25% stake in Hilton for around $6.5 billion to become its biggest shareholder.
Today, HNA owns 26.1% of Hilton.
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Following a $50 billion investment spree in the past two years, HNA has sold assets such as land and office buildings in recent months to pay down a large pile of debt that is straining its finances.
In just the first 11 months of last year, HNA's bank loans and bonds surged by more than one-third to 637.5 billion yuan ($101.1 billion), a HNA China bond market filing showed.
HNA had taken out a loan for its Hilton shares as well. A December 2017 SEC filing showed HNA had increased a loan against its Hilton shares to $3.5 billion from $3 billion. The lenders are JPMorgan Chase & Co, Credit Suisse AG, Deutsche Bank AG and UBS AG.
No details were available on when or to whom HNA would sell its Hilton stake, or the size of the divestment. A Hilton spokesman declined to comment.
An October 2016 SEC filing showed there are restrictions on how HNA can sell its Hilton stake if a divestiture happens in the first two years of ownership. Limitations included obtaining the approval of a majority of Hilton's board.
HNA sold its 25% stakes in Park Hotels & Resorts and Hilton Grand Vacations Inc in March. Both stakes were worth a total of $2.5 billion and were sold in the open market.