Kaisa offers bond swap over cash flow issues, stocks to resume trading

(Bloomberg) – Chinese developer Kaisa Group Holdings Ltd. launched an exchange offer for at least $ 380 million in bonds to avoid default during the country’s real estate liquidity crisis.

The builder has offered to exchange at least 95% of its 6.5% $ 400 million note maturing Dec. 7 for new notes with the same coupon maturing in June 2023. If the offer to bond holders fail, the developer may not be able to repay the bonds and may consider debt restructuring, he said in a stock exchange document on Thursday.

Kaisa is the latest real estate company to attempt to consolidate its finances as a debt crisis initially centered on China Evergrande Group engulfs the industry. The liquidity crisis follows a government campaign to reduce indebtedness in the sector and has been exacerbated by falling sales and house prices.

See details of the bond exchange offer here

“Despite our efforts to reduce our interest-bearing debt in response to government regulations, the current sharp decline in the funding environment has limited our sources of funding to meet upcoming maturities,” Kaisa said in the statement.

Kaisa is one of China’s largest issuers of high yield dollar bonds, with more than $ 11 billion of bonds outstanding. Its 2021 bond is listed at 50.6 cents to the dollar, according to prices compiled by Bloomberg. Kaisa still has $ 2.8 billion in dollar bonds due next year, including a $ 550 million note in April.

The statement came hours after Kaisa announced plans to resume trading in its shares on Thursday, repay overdue wealth management products and speed up the divestiture of real estate projects and “high quality assets” .

Hong Kong-listed Kaisa shares were suspended on November 5 pending an announcement containing inside information. The company put up for sale 18 projects in Shenzhen, with a total estimated value of 81.8 billion yuan ($ 12.8 billion), Bloomberg reported at the time.

A set of offshore bondholders from Kaisa Group Holdings have hired advisers, according to people with knowledge of the situation. Like Evergrande, Kaisa is grappling with individuals demanding repayment of overdue wealth management products. The company has guaranteed the products, which represent 12.8 billion yuan in principal and interest, local media reported earlier this month.

About 1.5 billion yuan in wealth products related to the Kaisa Group and its associates became due in October and November, the company said in a statement on Wednesday. Kaisa is implementing measures to repay about 1.1 billion yuan in wealth products, he said. These include the payment of 10% of the principal in the month in which they are due, and an additional 10% every three months thereafter.

© 2021 Bloomberg LP


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