China’s Kaisa fails to get bondholders’ approval to extend maturity, risk of default – .

China’s Kaisa fails to get bondholders’ approval to extend maturity, risk of default – .

  • 6.5% Kaisa $ 400 Million Notes Due Dec 7
  • Kaisa still considering selling assets and expanding debt
  • Evergrande 30-day grace period for the coupon missed on December 6

December 3 (Reuters) – Chinese property developer Kaisa Group Holdings Ltd (1638.HK) said on Friday it had failed to get the minimum 95% approval it needed from offshore bondholders to extend the maturity of a $ 400 million note due next week, increasing the risk of default.

As China’s real estate industry grapples with an unprecedented liquidity shortage, Kaisa now faces the possibility of defaulting on its 6.5% offshore bonds due December 7 and re-focusing on others. developers, who also face a wall of offshore debt maturing in the coming months. .

Kaisa had hoped to swap the $ 400 million 6.5% offshore bonds for new notes due June 6, 2023 at the same interest rate if at least 95% of the holders agreed. He did not disclose how many bondholders had agreed to the offer.

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Shares of the struggling real estate company fell 9.8% to a record low of HK $ 0.92, dropping the stock so far this year to around 75%.

The company, which became the first Chinese real estate developer to default on its dollar bonds in 2015, said it had been in talks with representatives of some bondholders but no “legally binding agreement.” had not yet been concluded.

“To alleviate the current liquidity problem and achieve an optimal solution for all stakeholders, the company is evaluating and closely monitoring the financial and cash position of the group,” he said on Friday.

He added that he was still studying the sale of assets and the extension or renewal of debt obligations, but warned that there was no guarantee that he would be able to meet the deadline of the December 7.

Failure to repay or come to an agreement with creditors would “have a significant negative effect” on Kaisa’s financial position, he said.

Kaisa is the second-largest dollar bond issuer among Chinese real estate developers after China Evergrande Group (3333.HK), which has over $ 300 billion in liabilities and, like the others, has been struggling to raise capital. to avoid payment default.

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, in his note exchange offer, Kaisa said he might consider a debt restructuring exercise if bondholders do not approve of the maturity extension.

Kaisa’s failure to get a much-needed lifeline from its creditors will also weigh on other smaller developers looking to avoid lengthy and messy litigation and restructuring processes, analysts have said.

Also on the horizon is the end of a 30-day grace period for Evergrande, which narrowly avoided defaults, after failing to pay coupons totaling $ 82.5 million due on November 6.

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Reportage of Sameer Manekar à Bangalore; By Sumeet Chatterjee and Nikhil Kurian Nainan; Montage by Shri Navaratnam et Christopher Cushing

Our Standards: Thomson Reuters Trust Principles.


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