Shenzhen government said to seek investors to buy Kaisa stakes

[BEIJING] The Shenzhen government is holding talks with several property developers in a bid to orchestrate investments in Kaisa Group Holdings Ltd., people familiar with the matter said today.

The government doesn't want stakes to be sold at a discount, one of the people said, asking not to be identified because the discussions are private.

Kaisa, a developer based in the southern Chinese city of Shenzhen, failed to make US$23 million (S$30.7 million) coupon payment, due Jan 8, on its US$500 million of 2020 dollar bonds, putting it at risk of becoming the first real estate company in China of defaulting on its US currency debt. The company had several of its projects in Shenzhen blocked last month and key executives, including its chairman, Kwok Ying Shing, quit.

Kaisa is also being probed over alleged links to Jiang Zunyu, the former security chief of Shenzhen who was taken into custody in a graft probe, two people familiar said on Jan 13.

An official from Shenzhen city government's press office said they don't have information regarding this matter. An officer from Kaisa's public relation department wouldn't comment over phone.

A number of claims onshore have already been made over Kaisa's assets.

Dalian Intermediate People's Court, in China's northeast Liaoning province, froze 540 million yuan (S$116 million) of deposits on Jan 12 as part of lawsuit filed by Industrial & Commercial Bank of China, other people familiar said Jan 19. The same court ordered 100 million yuan be stopped on Jan 9 as part of law suit brought by China Everbright Bank Co., those people said.

Investors in a 2.5 billion yuan Kaisa trust due on Jan 21 will be repaid their principal plus interest because the product will be transfered by its trustee to a third party that will assume the obligations, two people familiar with the matter said on Jan 20.

BLOOMBERG