Hainan Airlines' parent to raise US$5.9b

China's HNA Group will receive strategic investment of 38 billion yuan (US$5.88 billion) after its restructuring, which will go to 11 of its entities including its flagship carrier Hainan Airlines.

Gu Gang, the group's party secretary and leader of the government-led working group addressing HNA's liquidity issues, disclosed the investment at a meeting of its creditors, Thepaper.cn reported yesterday.

He did not elaborate on where the investment was coming from but said about 25 billion yuan of the strategic investment would go to Hainan Airlines to replenish its cash flow.

Hainan Airlines said in a separate statement yesterday that it would use funds from strategic investors and future operating income to repay the debts of the airline and of the other 10 entities.

HNA was placed in bankruptcy administration in February and a working group created by the government of its home province of Hainan has been addressing the company's liquidity problems.

Gu also told yesterday's meeting that Hainan Airlines had worked out a debt restructuring plan with major domestic and overseas aircraft lessors, which had given substantial exemptions on its debts, the sources said.

Hainan Airlines' interest-bearing liabilities will fall to 60 billion yuan after the reorganization, its total assets will stand at 170 billion yuan and its debt ratio will drop to 81 percent.

A document detailing HNA's restructuring plan had said that creditors of the 11 entities have reported that they are owed 397.2 billion yuan of unpaid debt. Only 161.29 billion yuan has been recognized by the court and for the restructuring.