Shares in HNA subsidiaries tumble after misuse of funds revealed

Shares in listed subsidiaries of China’s troubled HNA Group, once the driving force behind a wave of overseas Chinese dealmaking, fell sharply after several of them revealed that billions of dollars in funds had been misused. The disclosures were the latest ugly twist in the collapse of the conglomerate, originally a domestic airline operator that grew rapidly thanks to a debt-fuelled dealmaking binge where it spent more than $40b, including on stakes in Deutsche Bank and hotel operator Hilton International. In a statement to the Shanghai stock exchange this weekend, Hainan Airlines Holding said that “self-investigations” revealed billions of dollars of company funds had been used for non-business purposes. Hainan Airlines, and two other HNA companies CCOOP Group and HNA Infrastructure Investment Group, also said in filings that they had failed to disclose debt guarantees between companies within the group. The revelations on Monday sent shares in the listed HNA division tumbling. Both Hainan Airlines Holding and CCOOP Group dropped almost 10%, the daily limit for exchanges in Shanghai and Shenzhen. The disclosures come as HNA creditors last week applied to commence bankruptcy proceedings, after a court said the company was unable to pay its debts. Story has more background.<br/>