Kaisa offers to swop bonds for new notes due 2023 in a bid to avert default

Hong Kong

CHINA'S Kaisa Group Holdings said on Thursday (Nov 25) that it wants to extend the maturity of a US$400 million bond by a year and a half - part of the property developer's efforts to avoid a messy default and resolve a liquidity crisis.

In a filing, Kaisa said it would exchange its 6.5 per cent offshore bonds due Dec 7 for new notes due Jun 6, 2023, at the same interest rate if at least 95 per cent of holders accept.

Kaisa, which has the most offshore debt among Chinese developers after China Evergrande Group, missed coupon payments totalling US$88.4 million due on Nov 11 and 12. The payments have a 30-day grace period.

Kaisa said a sharp downturn in the financing environment has limited its funding sources to meet upcoming maturities.

"If the exchange offer and consent solicitation are not successfully consummated, we may not be able to repay the existing notes upon maturity on Dec 7, and we may consider alternative debt restructuring exercise," it said in the filing.

Chinese developers are facing an unprecedented liquidity squeeze due to regulatory curbs on borrowing, causing a string of offshore debt default, credit-rating downgrades and sell-offs in developers' shares and bonds.

Kaisa has been scrambling to raise capital by divesting assets including Hong Kong-listed property management unit, Kaisa Prosperity Holdings.

It recently sold a land parcel in Hong Kong to a local investor for HK$3.78 billion (S$662.8 million), recovering around HK$1.3 billion cash after repaying the loans it borrowed for the land, Reuters reported this week.

Kaisa is also selling another land plot in the city.

"Providing solutions and more clarity to the market is positive; afterall Kaisa's fundamentals are good, if it manages to strike a deal with creditors it can repay bit by bit to get past this crisis," said Kington Lin, managing director of Asset Management Department at Canfield Securities.

The developer, in a separate filing late on Wednesday, said it aims to accelerate the disposal of real estate projects and other high-quality assets to improve liquidity.

Having missed payments on onshore wealth management products totalling 1.5 billion yuan (S$321.2 million) due in October and November, Kaisa said it implemented repayment measures for 1.1 billion yuan and is negotiating the remainder with investors.

The developer also said that "certain members of the group" did not meet repayment obligations under finance agreements involving bank loans and other borrowing, and that it is formulating an overall repayment plan. REUTERS