APAC: China's HNA consortium pulls out of Bulgaria airport deal

05 October 2018 - 11:27 am UTC

A consortium led by China’s HNA Group has told the Bulgarian government it will not sign the concession agreement to run the Plovdiv Airport after being awarded the tender.

The Bulgarian government said Thursday (4 October) the Minister of Transport, Information Technologies and Communications' chair Rosen Zhelyazkov will propose to Bulgaria's Council of Ministers to terminate the concession procedure. Zhelyazkov explained the tender did not apply to the new European Union rules regarding concessions.

A government spokesperson told Inframation the outcome from a new government analysis on the concession agreement and documentation for the procedure might be released in the following weeks.

The consortium formed between the Chinese tourism-to-property conglomerate’s airport offshoot and Dutch-registered Plovdiv Airport Invest in March won the 35-year concession to operate, repair and maintain the airport in Plovdiv - Bulgaria’s second largest city.

The concessionaire was expected to invest EUR 79m over the period and pay an annual concession fee of BGN 600,000 (USD 352,734) in addition to 6% of the total net income from operation of the project.

The HNA consortium beat the second-ranked bidder - a consortium between Bulgaria’s Trakia Economic Zone and Plovdiv-based PIMK - which provides transport services for logistics companies. The consortium agreed to invest about EUR 65.5m during the 35-year concession period. The annual concession fee it offered was BGN 120,000 plus 6% of all net profit from the airport’s operation.

HNA, whose airport offshoot HNA Airport Group built and operates Haikou Meilan International Airport among 16 airports in China, said in May that it attempted to build Plovdiv Airport into a cargo and regional tourist hub for Central and Eastern Europe. It used to be one of the most acquisitive Chinese conglomerate overseas but has since last year been troubled with a hefty debt pile and forced to offload property assets globally.

In August last year, the group completed an 82.5% stake purchase in Germany’s Frankfurt-Hahn Airport for EUR 15.1m despite debt concerns as part of its plan to expand into European aviation.  

An HNA spokesperson did not reply to Inframation request for comment.

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