China’s Kaisa fails to get bondholders nod to extend maturity, risks default

A sign on Kaisa Plaza, a real estate property developed by Kaisa Group Holdings, is seen near the apartment building in Beijing, China, December 1, 2021. REUTERS/Tingshu Wang

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  • Kaisa bonds worth $400 million and 6.5% due December 7th
  • Kaisa is still looking into asset sales, debt extension
  • Evergrande 30-Day Grace Period for Missed Coupon Dec. 6

(Reuters) – Chinese property developer Kaisa Group Holdings Ltd (1638.HK) said Friday it has failed to secure the minimum approval of the 95% it needs from overseas bondholders to extend the maturity of a $400 million bond maturing next week. This raises the value of the bonds. risk of default.

With the Chinese real estate sector under unprecedented liquidity pressure, Kaisa now faces the possibility of defaulting on its 6.5% offshore bond maturing December 7, attracting renewed focus to other developers who are also staring at a wall of offshore debt maturing over the next few months.

Kaisa had hoped to replace the $400 million external bond, which is 6.5%, with new notes due on June 6, 2023 at the same interest rate if at least 95% of its holders agreed. She did not reveal how many bondholders had accepted the offer.

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Shares of the beleaguered real estate company plunged 9.8% to a record low of HK$0.92, sending the stock down so far this year to around 75%.

The company, which became the first Chinese property developer to default on its dollar bonds in 2015, said it was in talks with representatives of some bondholders, but no “legally binding agreement” had been entered into yet.

“To facilitate the current liquidity issue and reach an optimal solution for all stakeholders, the company is evaluating and closely monitoring the financial position and cash position of the group,” it said on Friday.

It added that it was still considering selling assets and extending or renewing debt obligations, but cautioned that there was no guarantee that it would be able to meet the December 7 maturities.

It said failure to pay or reach an agreement with creditors would have a “material negative impact” on Kaisa’s financial position.

Kaisa is the second largest issuer of dollar bonds among real estate developers in China after China Evergrande Group (3333.HK), which has more than $300 billion in commitments and, like others, has been scrambling to raise capital to stave off defaults.

Reuters reported last month that the company was looking to sell its Hong Kong-listed property management unit, Kaisa Prosperity Holdings Ltd (2168.HK).

Last week, Kaisa said in its banknote exchange offer that it may consider debt restructuring if bondholders do not agree to an extension of maturity.

Analysts said Kaisa’s failure to obtain a much-needed lifeline from its creditors will also affect other smaller developers looking to avoid long and messy litigation and restructuring.

Also looming was the end of a 30-day grace period for Evergrande, which has been narrowly avoiding default, after it failed to pay coupons totaling $82.5 million due on November 6.

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Additional reporting by Sameer Manekar in Bengaluru. Written by Sumit Chatterjee and Nikhil Kurian Nainan; Editing by Shree Navaratnam and Christopher Cushing

Our Standards: Thomson Reuters Trust Principles.


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