HNA Obscured Ownership Stakes in Gategroup Deal, Swiss Regulator Says
Chinese firm didn’t disclose the extent of co-founders’ holdings, Swiss Takeover Board says
Chinese conglomerate HNA Group Co. supplied false information and failed to disclose key ownership stakes of some of its executives while acquiring a company last year, a Swiss regulator found.
The regulator, the Swiss Takeover Board, said Friday that HNA, which has been facing increasing scrutiny from regulators in the U.S. and China, last year gave incorrect information about two of its own stakeholders in its offer prospectus for its $1.5 billion deal to acquire Swiss air-travel logistics company Gategroup Holding AG.
The board said HNA inaccurately represented the ownership stake held by Beijing resident Guan Jun, as well as that of Bharat Bhise, chief executive of Hong Kong-based private-equity and investment advisory firm Bravia Capital.
The regulator said their share holdings were actually 12.01% and 17.15%, respectively, not 12.35% and 17.4%, as HNA had claimed in the offer prospectus.
HNA also failed to disclose that the two were holding stakes on behalf of the company’s co-founders, including Chen Feng, Wang Jian and Adam Tan, who should have been listed as the beneficial owners of the shares, the regulator said.
The Swiss regulator earlier this year had asked HNA to provide more information about its ownership and shifting of stakes during the acquisition process.
The company, which announced more than $40 billion worth of deals between early 2015 and October, has been scrambling to explain its ownership and corporate structure to the lenders and banks that advise it. One of its deals is currently being held up by U.S. regulators.
The Swiss regulator said Ernst & Young LLP will examine whether HNA’s top executives followed the country’s minimum-price regulations and best-price rules during the acquisition. HNA will pay operating costs of 50,000 Swiss francs ($51,000) and could face monetary penalties for failing to provide complete information during the takeover. The size of such a potential penalty, if one is imposed, hasn’t been made clear.
“We cooperated fully with the Swiss Takeover Board’s inquiry, and we respect its authority in this matter,” a spokesman for HNA said.