Narrative
Full Description
Project narrative
On June 21, 2013, HNA Group Company Limited (a Chinese private conglomerate company) entered into an agreement to purchase a 100% stake in TIP Trailer Services Group — an Amsterdam, Netherlands-headquartered logistics and transport company — from its owner GE Capital. The acquisition consideration was undisclosed, but it was worth hundreds of millions of euros and GE Capital was reportedly targeted a €800 million EUR ($1 billion USD) sale price. The sale valued TIP Trailer at an enterprise value of over €500 million EUR. To finance this acquisition, in 2013 the Hainan Branch of China Development Bank Corporation (CDB) issued an acquisition loan to HNA Group. The loan was secured by (i.e. collateralized against) a pledge by HNA Group of the shares (100%) in TIP Trailer Services Group. TIP Trailer Services Group is an Amsterdam-based European transportation and logistics company that provides rentals and leasing of equipment including trucks, tankers, and trailers to transportation companies. It had one of the largest trailer and truck fleets in Europe. At the time of the acquisition, it had 48 branches throughout 16 countries, over 100 rental locations, over 50 workshops, and 100 mobile services fans with a transport equipment fleet owned and managed by TIP of 48,000 units. GE Capital had begun considering of a sale of TIP Trailer Services as early as September 2011. The acquisition was completed on October 23, 2013. HNA Group began to have major debt issues after the acquisition, much of the debt because of acquisitions of foreign assets. To service its debt, HNA began to sell assets. In May 2018, HNA Group agreed to sell TIP Trailer Services for $1.19 billion USD to I Squared Capital. To facilitate this sale, HNA entered into an agreement with CDB Hainan Branch for the release of the collateral of shares in TIP Trailer; HNA then used the sale proceeds of TIP Trailer to repay the existing CDB acquisition loan used for the initial acquisition of TIP Trailer.
Staff comments
1. The Chinese project title is 海航并购Tip Trailer贷款的交易. 2. The face value of the CDB loan is unknown. The total cost of the acquisition was undisclosed, but was at least €500 million EUR (the enterprise value) and was targeted at €800 million EUR, AidData has assumed the acquisition had a cost of approximately €800 million EUR. Given that CDB M&A loans often cover at least 70% of the total cost of the acquisition, AidData assumes for the time being that the face value of the CDB loan was roughly equivalent to €560 million EUR. This issue warrants further investigation.