China’s Kaisa seeks to increase maturity on $400 million offshore bond, shares surge By Reuters

© Reuters. FILE PHOTO: An image exhibits the Kaisa Plaza of Kaisa Group Holdings Ltd on a hazy day in Beijing, China, November 5, 2021. REUTERS/Thomas Peter/File Picture

By Clare Jim and Sameer Manekar

HONG KONG (Reuters) -China’s Kaisa Group Holdings Ltd mentioned on Thursday it desires to increase the maturity of a $400 million bond by a yr and a half – a part of the property developer’s efforts to keep away from a messy default and resolve a liquidity disaster.

In a submitting, Kaisa mentioned it might change its 6.5% offshore bonds due Dec. 7 for brand new notes due June 6, 2023, on the identical rate of interest if at the very least 95% of holders settle for.

Kaisa, which has essentially the most offshore debt amongst Chinese language builders after China Evergrande Group, missed coupon funds totalling $88.4 million due on Nov. 11 and 12. The funds have a 30-day grace interval.

Shares in Kaisa, which resumed buying and selling after suspension on Nov. 5, have been up 18% in afternoon commerce with buyers cheered by the agency’s try to resolve fee issues.

Kaisa mentioned a pointy downturn within the financing atmosphere has restricted its funding sources to satisfy upcoming maturities.

“If the change supply and consent solicitation aren’t efficiently consummated, we could not be capable of repay the prevailing notes upon maturity on Dec. 7, and we could contemplate different debt restructuring train,” it mentioned within the submitting.

Chinese language builders are going through an unprecedented liquidity squeeze resulting from regulatory curbs on borrowing, inflicting a string of offshore debt default, credit-rating downgrades and sell-offs in builders’ shares and bonds.

Kaisa has been scrambling to boost capital by divesting property together with Hong Kong-listed property administration unit, Kaisa Prosperity Holdings Ltd.

It just lately offered a land parcel in Hong Kong to a neighborhood investor for HK$3.78 billion ($484.82 million), recovering round HK$1.3 billion money after repaying the loans it borrowed for the land, Reuters reported this week. Kaisa can be promoting one other land plot within the metropolis.

“Offering options and extra readability to the market is optimistic; afterall Kaisa’s fundamentals are good, if it manages to strike a take care of collectors it could repay little by little to get previous this disaster,” mentioned Kington Lin, managing director of Asset Administration Division at Canfield Securities Restricted.

The developer, in a separate submitting late on Wednesday, mentioned it goals to speed up the disposal of actual property tasks and different high-quality property to enhance liquidity.

Having missed funds on onshore wealth administration merchandise totalling 1.5 billion yuan ($234.80 million) due in October and November, Kaisa mentioned it applied reimbursement measures for 1.1 billion yuan and is negotiating the rest with buyers.

The developer additionally mentioned “sure members of the group” didn’t meet reimbursement obligations beneath finance agreements involving financial institution loans and different borrowing, and that it’s formulating an general reimbursement plan.

Different cash-strapped builders together with Evergrande, the world’s most indebted developer which has been stumbling from deadline to deadline in current weeks because it grapples with greater than $300 billion in liabilities, are additionally negotiating with their collectors and scrambling to boost funds.

“Corporations need to purchase time, whereas collectors need to recuperate their cash. Accepting an extension is best than calling the businesses chapter and get nothing again,” mentioned Lin.

Evergrande electrical car (EV) subsidiary’s onshore unit raised its registered capital by 39% to $3.5 billion, native media reported on Thursday. The Hong Kong-listed Evergrande New Power Automobile mentioned final week that it deliberate to boost round $347 million via a share placement.

Smaller rival Fantasia Holdings mentioned on Wednesday it has reached an settlement with holders of a 1.5 billion yuan onshore bond maturing in 2023 to pay 20% of a coupon due on Thursday and the remaining a yr later.

However, media reported, that an extension decision for an additional onshore bond due 2023 price 2.5 billion yuan didn’t go on Wednesday.

Fantasia has missed fee of $205.7 million offshore notes that have been due Oct. 4.

Individually, Score company Fitch downgraded on Wednesday China Aoyuan’s credit standing to “CCC-” from “B-“, reflecting the lowered possibilities that the agency will be capable of refinance its $688 million offshore bond due January 2022.

Aoyuan mentioned on Monday it has prolonged the redemption date of onshore asset-backed securities price 816 million yuan and engaged Admiralty Harbour Capital Restricted and Linklaters as advisers to evaluate the corporate’s capital construction and speak to collectors.

Shares of Fantasia have been flat, whereas Aoyuan and Evergrande edged up 2.3% and 0.7%, respectively. was flat.

($1 = 6.3885 renminbi)

($1 = 7.7967 Hong Kong {dollars})

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