China’s HNA Group Co. shot to international prominence by spending more than $40 billion on acquisitions across six continents from 2015. The once little-known airline operator became a major shareholder of Hilton Worldwide Holdings Inc. and Deutsche Bank AG as well as paying top dollar for high-end properties from Manhattan to Hong Kong. But the breathtaking buying spree prompted questions by regulators about its opaque ownership structure. And the focus soon shifted to HNA’s struggle to manage its spiraling debt, which has prompted a reversal of course and an equally dramatic selling spree.

1. How bad are HNA’s finances?

HNA has repeatedly said they’re fine but the numbers tell a different story. The company doesn’t generate enough profit to cover its interest payments and its short-term debt soared to more than 185 billion yuan ($29 billion) in the first half of 2017, exceeding its cash reserves. The cracks widened last year as HNA needed to pay record prices for debt and canceled bond and share sales. Then this year there were missed payments to banks and shares were suspended in multiple HNA units. Even the flagship airline reportedly faced losing a fuel supplier over unpaid bills.

2. What does HNA say?

In December, the Chinese conglomerate predicted it won’t default in 2018 or beyond. “Currently we have a healthy and stable debt structure,” Board director Zhao Quan said then. The company declared in February that it was in a “very healthy” financial position and that it was the victim of a conspiracy against the Chinese government and one of its most loyal companies. HNA received a potential lifeline that month via a 20 billion-yuan bank loan. The group is said to expect the pressure to ease in the second quarter of 2018.

3. What’s it doing to address its woes?

Selling stuff. It’s already cut its stake in Deutsche Bank and sold its shareholding in a spinoff of Hilton, of which it owned a quarter. It’s offloaded properties in London, Sydney, Hong Kong and the U.S. And it’s planning to list acquisitions including Gategroup Holding AG. By Bloomberg’s estimates derived from announced deals and media reports, the fire sale has raised $5.5 billion and there are at least another $6.2 billion of assets up for sale.

4. Is debt HNA’s only concern?

Hardly. In the U.S., HNA is trying to buy a stake in SkyBridge Capital, the hedge-fund firm of Anthony Scaramucci, who briefly worked for President Donald Trump. The transaction has been delayed by the Committee on Foreign Investment in the United States, or CFIUS, which vets sales of American assets to foreign buyers to protect national security. HNA is also being sued as part of the U.S. bankruptcy of a travel company it invested in. And a U.S. technology firm is suing HNA for allegedly providing false and inconsistent information about its ownership to CFIUS that caused a takeover deal to collapse. HNA says the lawsuit is baseless. Regulators in Switzerland ruled HNA provided incorrect information about shareholdings and in New Zealand rejected an acquisition because of HNA’s opaque ownership structure.

5. What’s happening in China?

Local regulators have stepped up scrutiny of the country’s most prolific dealmakers, including HNA -- part of a government campaign to tackle financial risk and slow the pace of overseas takeovers that contributed to a surge in capital outflows. In the authorities’ boldest step yet, insurance regulators seized Anbang Insurance Ltd., owner of New York’s Waldorf Astoria hotel, and arrested its founder in February.

6. What’s known about HNA?

Founded in 1993 as a regional airline operator, with George Soros as an early investor, HNA says it’s created 410,000 jobs worldwide and built up assets of about $180 billion. Guo Wengui, a wealthy Chinese businessman who now lives in exile, has alleged that HNA has secret financial ties to top Communist Party officials. HNA denied Guo’s claims and sued him in New York for defamation.

7. So who does own HNA?

HNA disclosed in July 2017 that it’s controlled by two company-connected charities named Cihang -- one based in New York, the other in China’s resort island of Hainan -- that together own 52 percent, and that 12 company officials, including founders Chen Feng and Wang Jian, together hold about 47.5 percent. Prior to that, a little-known investor named Guan Jun had been HNA’s biggest shareholder, with a 29 percent stake, according to Chinese corporate filings in late 2016. When HNA reorganized in early 2017, Guan distributed most of his holdings to five individuals, who then donated the shares to HNA’s Cihang foundation. Guan donated his remaining stake, about 4.4 percent, to the charity as well. As yet, there’s been no explanation why HNA executives parked their shares with Guan in the first place.

8. What’s known about the U.S. charity?

Hainan Cihang Charity Foundation Inc., formed in New York in December 2016, holds 29.5 percent of HNA and its office is at 850 Third Avenue in Manhattan, a property HNA purchased in a 2016 joint venture, data from Real Capital Analytics show. In September, the nonprofit revealed the identity of its three directors, including Adam Tan, HNA Group’s chief executive officer, and Chen Guoqing, the brother of co-founder Chen. Former German Vice Chancellor Philipp Roesler was appointed as its chief executive officer in December and pledged to give away as much as $200 million toward philanthropic causes.

9. What about the Chinese foundation?

Hainan Province Cihang Foundation, founded in October 2010, holds a 22.75 percent stake in HNA. The foundation’s website says it’s a nonprofit charity that “cultivates projects in various fields such as educational aids, supporting the poor and helping the underprivileged, fighting earthquake and relieving disaster, cultural promotion, medical rescue, green EP, and scientific innovation.” In its latest annual report, the charity had 890 million yuan in assets as of 2015.

--With assistance from Laurence Arnold

To contact the reporter on this story: Prudence Ho in Hong Kong at pho83@bloomberg.net.

To contact the editors responsible for this story: Young-Sam Cho at ycho2@bloomberg.net, Grant Clark

©2018 Bloomberg L.P.