Kaisa dispute unearths debt skeletons

Beijing

WHEN investing in property, check the basement. Kaisa shows what happens when that advice is ignored. Days after rattling lenders with a late interest payment, the Chinese developer has announced its debts are double the level it reported at the end of June. That raises the stakes for the company's restructuring, and others that may follow.

Kaisa, putting its affairs in order ahead of a potential takeover from rival Sunac, says its debt as at end of December totalled 65 billion yuan (S$14 billion), around half of it from lenders other than banks. That may help explain why the apparently cash-rich company failed to pay a US$26 million interest payment on time, and recently had to raise US$380 million for working capital.