China’s Kaisa seeks to extend maturity of $ 400 million offshore bond

A photo shows the Kaisa Plaza of Kaisa Group Holdings Ltd on a foggy day in Beijing, China on November 5, 2021. REUTERS / Thomas Peter / File Photo

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HONG KONG, Nov. 25 (Reuters) – Chinese group Kaisa Group Holdings Ltd (1638.HK) on Thursday said it wanted to extend the maturity of a $ 400 million bond by another year and a half – as part the real estate developer’s efforts to avoid a default mess and resolve a liquidity crisis.

In one filing, Kaisa said he would swap his 6.5% offshore bonds due December 7 for new notes due June 6, 2023, at the same interest rate if at least 95% of the holders agree.

Kaisa, which has the most offshore debt among Chinese developers after China Evergrande Group (3333.HK), missed coupon payments totaling $ 88.4 million due on November 11 and 12. Payments have a 30 day grace period.

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Shares of Kaisa, which resumed trading after a suspension on November 5, rose 18% in afternoon trading as investors were encouraged by the company’s attempt to resolve payment issues.

Kaisa said a sharp decline in the funding environment has limited her funding sources to meet upcoming deadlines.

“If the exchange offer and solicitation of consent are not completed, we may not be able to redeem the existing notes when due on December 7 and we may consider another exercise in restructuring the debt, “he said on the record.

Chinese developers face unprecedented liquidity shortage due to regulatory restrictions on borrowing, sparking a spate of overseas defaults, credit rating downgrades and massive sales of stocks and bonds developers.

Kaisa has made an effort to raise capital by divesting assets, including the Hong Kong listed property management unit, Kaisa Prosperity Holdings Ltd (2168.HK).

He recently sold a piece of land in Hong Kong to a local investor for HK $ 3.78 billion ($ 448.82 million), recovering around HK $ 1.3 billion in cash after repaying the loans he he borrowed for the land, Reuters reported this week. Kaisa is also selling another piece of land in the city.

“Providing solutions and more clarity to the market is positive; after all, Kaisa’s fundamentals are good, if he can make a deal with the creditors, he can repay gradually to overcome this crisis, ”said Kington Lin, general manager of the asset management department. at Canfield Securities Limited.

The developer, in a separate filing Wednesday night, said it aims to speed up the divestiture of real estate projects and other high-quality assets in order to improve liquidity.

Having missed payments on onshore wealth management products totaling 1.5 billion yuan ($ 234.80 million) due in October and November, Kaisa said he has put in place repayment measures to 1.1 billion yuan and negotiate the rest with investors.

The developer also said that “some members of the group” had failed to meet their repayment obligations under financing agreements involving bank loans and other borrowing, and that it was formulating a plan to global reimbursement.

Other cash-strapped developers, including Evergrande, the world’s most indebted developer who has stumbled from maturity to maturity in recent weeks as it grapples with more than $ 300 billion in liabilities, are also negotiating. with their creditors and scramble to raise funds.

“Businesses want to buy time, while creditors want their money back. Agreeing to an extension is better than declaring businesses bankrupt and getting nothing back,” Lin said.

The onshore unit of Evergrande’s electric vehicle (EV) subsidiary (0708.HK) increased its share capital by 39% to $ 3.5 billion, local media reported Thursday. Hong Kong-listed Evergrande New Energy Vehicle said last week that it plans to raise around $ 347 million through a stock offering. Read more

Smaller rival Fantasia Holdings (1777.HK) said on Wednesday it had reached an agreement with holders of a 1.5 billion yuan onshore bond maturing in 2023 to pay 20% of a coupon due Thursday and on remains a year later.

But, media reported, an extension resolution for another onshore bond due in 2023 worth 2.5 billion yuan was not passed on Wednesday.

Fantasia missed payment of $ 205.7 million in offshore tickets due on October 4.

Meanwhile, the rating agency Fitch downgraded China Aoyuan’s credit rating (3883.HK) on Wednesday to “CCC-” instead of “B-”, reflecting the reduced chances that the company will be able to refinance its $ 688 million offshore bond due January 2022.

Aoyuan said on Monday that it has extended the redemption date of the onshore asset-backed securities valued at 816 million yuan and hired Admiralty Harbor Capital Limited and Linklaters as advisers to assess the company’s capital structure and discuss with the creditors.

Fantasia shares were flat, while Aoyuan and Evergrande rose 2.3% and 0.7% respectively. The Hang Seng Index (.HSI) was stable.

($ 1 = 6.3885 yuan Chinese renminbi)

($ 1 = 7.7967 Hong Kong dollars)

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Reporting by Sameer Manekar in Bengaluru and Clare Jim in Hong Kong; Editing by Edwina Gibbs, Christopher Cushing and Simon Cameron-Moore

Our Standards: Thomson Reuters Trust Principles.


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