Hedge Fund Hands Lifeline to HNA Unit Shunned by Wall Street


It’s been a tough couple years for Pactera Technology International Ltd.

The tech outsourcing arm of embattled Chinese conglomerate HNA Group Co. has been ditched by Bank of America Corp. and Goldman Sachs Group Inc., sued over a collapsed acquisition and cut deep into junk territory by Moody’s Investors Service.

Now it turns out that a rare piece of seemingly good news last month -- an $80 million loan secured by Pactera after more than a year of failed attempts to attract funding -- may just be another sign of the fragile financial state of the company and its debt-laden parent.

The loan came from Davidson Kempner Capital Management, a U.S. hedge fund whose specialties including distressed investing, people with knowledge of the matter said. While terms of the deal weren’t disclosed, analysts suspect Pactera had to pay up to attract Davidson Kempner, which had $31 billion of assets under management in January.

“The fact that they’re borrowing money from a hedge fund, I think it’s a sign that they aren’t able to resolve their issues,” said Jin Rui Oh, a Singapore-based senior analyst at United First Partners. “It’s an open secret that they are in a really bad position.”

Failed Fundraisings

Pactera’s difficulties, some of which haven’t been previously reported, illustrate how HNA is still struggling to cope with the debt burden amassed during a $40 billion takeover spree. While the conglomerate has been shedding assets this year to reduce leverage, it no longer has access to cheap financing after some international banks distanced themselves from the group and China cracked down on the shadow lending system that helped fund HNA’s expansion.

Representatives for HNA and Davidson Kempner declin