Senior creditors said to have offered to take control of Swissport from China’s HNA Group

15-Aug-2020 Intellasia | South China Morning Post | 6:02 AM Print This Post

Debt-laden Chinese conglomerate HNA Group might have its stake in Swissport International wiped out under a plan to inject rescue financing into the beleaguered airport cargo handling company.

A group of senior secured creditors, including Apollo Global Management and SVP Global, have made an offer to restructure euro 2 billion (US$2.4 billion) worth of Swissport’s debt in return for equity, according to a person familiar with the matter.

The group of creditors holds euro 1.4 billion of Swissport’s senior secured debt and has committed to investing in the company to help it through a collapse in international travel caused by the coronavirus pandemic.

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Holders of Swissport payment-in-kind notes, which pay out in additional bonds rather than cash, have agreed to the plan devised by the senior secured creditors, the person said.

A spokesman for Swissport said the company has been in discussions with lenders and investors since the early phase of the global Covid-19 related market collapse. “We have been exploring several possible options to raise additional liquidity and to put Swissport on a stable financial foundation for the long term. These discussions are still ongoing and there has been significant and tangible progress,” he said.

In April, Swissport, the world’s largest provider of airport ground services and air cargo handling, said it had 40,000 employees on furlough, or other state-supported programmes such as short-time work. The company made 10,000 employees redundant, leaving under 15,000 of its formerly 64,000-strong staff on active duty at the time.

Headquartered near Zurich Airport, Swissport services flights at 300 airports in 50 countries. Ratings agency Moody’s estimated on June 9 that significantly lower traffic will result in negative free cash flow of around half a billion euros this year.

About 80 per cent of Swissport’s revenue is linked to the number of flights it services, and the remaining 20 per cent is generated from cargo handling, which is also depressed due to lower economic activity and supply chain disruption. The company had euro 350 million cash as of May.

HNA itself is struggling for survival, having been made a state ward after Chinese authorities took over its management in February. The Hainan-based group has been trying to sell Swissport after its international expansion unravelled spectacularly.

It is unclear if HNA, which bought Swissport for CHF2.73 billion (US$2.73 billion) in 2015 amid a global debt-funded acquisition spree, has responded to the senior secured creditors’ offer. A spokesman for HNA declined to comment immediately when approached about the debt restructuring offer.


Category: China

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