Kaisa wins over 80% of creditors after sweetening debt workout

[BEIJING] Kaisa Group Holdings Ltd, which last year became the first Chinese developer to default on dollar bonds, took a step closer to restructuring its offshore debt by sweetening its offer following talks with creditors.

The builder said in an exchange filing late Thursday that investors owning more than 80 per cent of offshore claims, which total the equivalent of about US$2.6 billion, agreed to support its restructuring plan following "substantive negotiations" with a group of creditors led by Farallon Capital Management LLC and BFAM Partners.

Farallon and BFAM said in a statement e-mailed by Newgate Communications LLP that they "are pleased to have come to a consensual resolution with Kaisa which has achieved a significant improvement for all bondholders."

Kaisa sweetened its restructuring terms, which it had first proposed on Jan 10, by offering to increase the coupon rates on the new bonds to be issued as replacement to existing notes. It also provided several options to receive future cash incentives which are triggered under different level of market capitalisation, and doubled the consent fee to 1 per cent for creditors who accept the new terms by March 23.

Kaisa's 8.875 per cent dollar notes due in 2018, on which it defaulted in April last year, rose 0.64 cent on the dollar, the biggest increase in two weeks, to 77.3 cents as of 10:00 am in Hong Kong.

The company will next seek approvals from courts in Hong Kong and Cayman Islands on or before March 29 to convene meetings of creditors to implement the debt workout, which requires at least 75 per cent majority consent.

BLOOMBERG