A Chinese conglomerate is planning to cut a staggering 100,000 staff as debt pressures mount

Jean Catuffe/Getty ImagesWenli Chen, Vice Chairman of HNA Group.

The HNA Group — a large private conglomerate based in China — is planning to cut up to a quarter of its global workforce of 400,000 staff, according to a report in the South China Morning Post (SCMP).

The SCMP cited a report from the Risk Event-Driven and Distressed Intelligence (REDD) website — a news outlet focused on emerging markets.

REDD reported that the job cuts would take place across human resources, business development and asset restructuring divisions, citing five unidentified sources.

The heaviest staff cuts will take place in divisions that HNA is looking to sell, as it scales down the business in order to pay down debt.

According to the SCMP, the HNA Group has told creditors that its facing an urgent liquidity crisis — with a shortfall of $US2.3 billion on its debt repayment obligations in the March quarter.

In a similar way to other large Chinese companies, the HNA Group has embarked on a multi-billion dollar global spending spree in recent years, largely financed by debt.

But the company has come under increased scrutiny from Chinese regulators, as authorities clamp down on risky lending and the buildup of excessive leverage in China’s financial system.

Today’s report follows an announcement last week that China-based Anbang Insurance will be taken over by a consortium of state-backed entities, led by the Chinese insurance regulator.

Anbang also embarked on an aggressive global expansion strategy, before its Chairman, Wu Xiaohui, was detained by Chinese authorities in June last year.

Around that time, a number of large Chinese companies including HNA Group, Anbang and property developer Dalian Wanda were singled out by Chinese banks for further scrutiny at the directive of China’s banking regulator.

As part of efforts to meet its debt obligations, HNA Group sold two parcels of land in Hong Kong in a $US2 billion deal in February.

The company was also alleged to have reduced its shareholding in Deutsche Bank, although a recent Financial Times investigation revealed that HNA’s complex and opaque structure makes it difficult to understand the exact nature of HNA’s Deutsche Bank stake.

According to the SCMP, HNA Group chairman Chen Feng said in January that the company’s liquidity problems stem from a number of large offshore transactions, while domestically China’s economy had transitioned to more moderate growth which made it harder to secure extensions to debt financing.

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