Sunac China Holdings Ltd. has agreed to buy 49.3 percent of Kaisa Group Holdings Ltd. in an 11th-hour deal that staved off a default by the troubled developer on a bond interest payment.
The deal comes just three days before the end of a grace period for Shenzhen-based Kaisa to repay US$23 million in interest on a bond, Bloomberg reported Thursday.
Sunac chairman Sun Hongbin said the company will make a general offer for Kaisa, which is facing a government investigation.
Kaisa’s fortunes began to unravel in December when the government blocked some of its apartment sales and founding chairman Kwok Ying Shing resigned, triggering a 47 percent plunge in the stock that month.
The company was on the brink of becoming the first Chinese developer to default on a dollar bond before Sunac’s proposed takeover.
“If Kaisa collapses, there’s no winner,” Sun said. “But if it’s done well, it’s a win-win” deal.
Sunac, which is among the top five developers in Shanghai and its hometown of Tianjin, is buying the stake from Kwok’s family trust.
The acquisition would be an opportunity for the company to expand into southern China, Sun said.
Sun did not disclose how much he agreed to pay. The 49.3 percent stake is worth HK$4 billion (US$516 million) based on Kaisa’s last-traded share price before the stock was suspended on Dec. 29 in Hong Kong. Sunac shares are also suspended.
The Shenzhen government has been seeking investors for Kaisa, which is being investigated over alleged links to a senior official in the city, the report said, citing people familiar with the matter.
The company had dealings with Jiang Zunyu, the former security chief of Shenzhen who has been under probe since October.
– Contact us at [email protected]