Ingram Micro CEO dismisses owner's woes

By on
Ingram Micro CEO dismisses owner's woes

Ingram Micro CEO Alain Monié has reassured partners that the indebtedness of parent company HNA Group, and a threat that it could be nationalized by China, will not impact the IT distributor.

“Ingram Micro operates as a separate stand-alone company that is not and cannot be integrated with HNA,” Monié wrote in a Feb. 25 letter to partners. “This is mandated by the U.S. government and has effectively insulated our company from HNA to minimize impact from any issues that may be experienced by HNA or its affiliates.”

The letter came days after Bloomberg reported that HNA Group—which primarily operates as an air carrier but has expanded its lines of business rapidly in recent years through borrowing and M&A—could be nationalized by the regional Chinese government after a sharp decline in revenue at its travel business due to the coronavirus outbreak.

Monié said Ingram Micro’s financial and operational independence is dictated by U.S. policies, which would have to be changed by the U.S. to allow the Chinese government to take over the business.

The CEO added that Ingram Micro does not rely on HNA for funds, and it keeps Ingram Micro’s debt separate from HNA. In addition, he said HNA cannot saddle Ingram with its own debt—about US$75 billion according to an article in Hong Kong newspaper The South China Morning Post.

“Any debt at the HNA level has no recourse to Ingram Micro or our financing facilities, therefore, financial difficulties or a default by HNA cannot impact Ingram Micro,” Monié told partners. “Finally, our balance sheet is also protected so that the only way Ingram Micro is allowed to send money to HNA is through the payment of dividends, which are limited by our financial covenants. What all this means for us—and for you—is that any potential change in ownership to a foreign entity does not and cannot impact this separateness required by the U.S.”

In his letter to partners, Monié said HNA’s financial difficulties are “irrelevant” to Ingram Micro partners.

“We've faced rumors and noise around HNA's financial difficulties for a few years and this will likely continue, especially in the recent weeks as the coronavirus outbreak has impacted significantly one of the major businesses of HNA: their airline business,” he wrote. “But on our side, we have executed incredibly well in the face of this noise, delivering a second straight year of strong financial performance, including strengthening our balance sheet, while never wavering from our commitment to do everything we can to help you profitably grow your business.”

This article originally appeared at crn.com

Got a news tip for our journalists? Share it with us anonymously here.
Copyright © 2018 The Channel Company, LLC. All rights reserved.
Tags:

Most Read Articles

You must be a registered member of CRN to post a comment.
| Register

Log In

Username / Email:
Password:
  |  Forgot your password?