Tuesday, December 21, 2021

China Property: "Kaisa Confirms Default on Offshore Notes, Plans Restructuring of $11.8B in Debt"

From Mingtiandi (Asia real estate intelligence), December 21:

Embattled developer Kaisa Group Holdings on Monday acknowledged its failure to make payments on three sets of offshore senior notes and confirmed that it had engaged restructuring advisors to work with creditors on a plan for $11.8 billion in outstanding dollar bonds.

The company controlled by founder and chairman Kwok Ying-shing said in an announcement to the Hong Kong stock exchange that it missed principal and interest payments on a $400 million note that matured on 7 December with no grace period.

In November, Kaisa missed a $29,875,000 interest payment on notes due in 2023 and a $58,501,287 interest payment on notes due in 2025. The 30-day grace period for both sets expired with the interest still unpaid, while a grace period for a $17,475,000 interest payment on notes due in 2026 is still in effect after Kaisa missed an initial 1 December deadline.

The non-payments may lead to creditors demanding acceleration of repayment, said Shenzhen-based Kaisa — the first Chinese developer to default on offshore bonds back in 2015 — though the company “has not received any notice regarding acceleration action by holders of the senior notes”.

Evergrande’s Footsteps

Kaisa’s planned debt restructuring, to be advised by US-based Houlihan Lokey, comes after fellow troubled developer China Evergrande earlier this month set up a “risk management committee” featuring officials from the Guangdong provincial government and mainland state-owned enterprises in a bid to reorganise its own $20 billion offshore debt pile.

Houlihan Lokey, which had already been engaged by Kaisa’s compatriots at Fantasia Holdings in October, is best known for advising the creditors of Lehman Brothers in the Wall Street bank’s $600 billion bankruptcy case after its collapse in 2008....