Bloomberg/ Hong Kong
Swissport International AG, the airport ground services firm owned by beleaguered Chinese conglomerate HNA Group Co, hired advisers to review its debt as passenger air traffic grinds to a halt because of coronavirus restrictions.
The company appointed Houlihan Lokey Inc as financial adviser as it considers a restructuring of its €1.6bn ($1.7bn) of debt, according to people familiar with the matter who asked not to be identified because the appointment is private.
“We are getting support from several financial and legal advisers to help us work through different scenarios,” Swissport spokesman Christoph Meier said Thursday, without confirming the appointment.
A representative for Houlihan Lokey didn’t immediately have a response.
Swissport is joining a growing list of companies in vulnerable industries such as travel, energy and retail trying to lessen their debt load or requesting state aid.
Offshore drilling firm Valaris Plc last month hired banks to help find a fix for the hole in its balance sheet left by plunging oil prices.
TUI AG, the world’s biggest tour operator, secured a €1.8bn ($2bn) loan from state-run KfW bank, in one of the biggest bailouts in Germany so far stemming from the virus. Swissport refinanced its debt just last summer.
Restrictions imposed on air travel because of the coronavirus pandemic, however, triggered a liquidity crisis, forcing the company to ask for government aid in some of the countries where it operates.
The company said last week it could run out of cash by early summer if the outbreak is harsher than expected or if it’s unable to secure government support and third-party financing.
Swissport’s junior debt fell to less than half face value from above par in a month, according to data compiled by Bloomberg.
Its secured bonds fell 10 cents on the euro yesterday to 49 cents, the biggest drop on record.
“Swissport did not enter the crisis in an unstable situation,” Meier said. “The company had €300mn pro-forma cash in total before the crisis.
That was a very comfortable position to navigate in a normal situation or even to absorb minor shocks.”
HNA’s attempts to sell Swissport, which it bought for 2.73bn Swiss francs ($2.8bn) in 2015, have failed in the past. China began assuming control of debt-laden HNA last month, paving the way for a hastened selloff of the once-sprawling conglomerate’s remaining assets.
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