Date
24 November 2017
Kaisa said "material modifications” to its offshore debt obligations may be needed to allow Sunac China's planned stake purchase to go ahead. Photo: Reuters
Kaisa said "material modifications” to its offshore debt obligations may be needed to allow Sunac China's planned stake purchase to go ahead. Photo: Reuters

Kaisa warns creditors of changes to debt payment terms

Troubled Chinese property developer Kaisa Group Holdings Ltd. (01638.HK) said it plans to start talks with lenders and bondholders with the goal of reaching a preliminary accord by the end of March.

But the Shenzhen-based company warned that “material modifications” to its offshore debt obligations may be needed to allow Sunac China Holdings Ltd.’s (01918.HK) planned stake purchase to go ahead, Bloomberg News reported.

“Whether the group meets upcoming payments under its existing debt obligations will be based on an assessment of the overall financial condition of the group and lenders and bondholders should not expect payments of principal and interest according to existing terms,” Kaisa said in a Hong Kong stock exchange filing. Its bonds fell after the announcement.

Kaisa said on Feb. 8 that it had made an interest payment of US$23 million on dollar-denominated bonds, avoiding a default after missing an initial due date in January.

The company still faces repayment demands. It has received notices from creditors, including project partners and suppliers, seeking about 28 billion yuan (US$4.5 billion) as of Jan. 31.

Sunac bought a 49.3 percent stake in Kaisa on Jan. 30 and sought to acquire the shares it doesn’t already own. The deal helped Kaisa avoid a default and lets Sunac expand into southern Chinese cities such as Shenzhen. Sunac is based in the northern city of Tianjin.

Kaisa intended to complete an agreement with debtors by the end of April, according to the Wednesday filing. The company hired Houlihan Lokey China Ltd. to provide advice on capital structure, including debt, the report said.

– Contact us at english@hkej.com

CG

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