Sunac China Holdings Ltd. (01918.HK), which has proposed to acquire cash-strapped Kaisa Group Holdings Ltd. (01638.HK), is urging overseas creditors to reach consensus on a debt restructuring plan, the Hong Kong Economic Journal reported Wednesday.
Kaisa’s financial position is deteriorating, the report said, citing Sunac China chief executive Sun Hongbin.
And the prospect of completing the proposed acquisition is 50-50 and falling, he said.
The troubled Shenzhen property group is scheduled to release its financial figures at the end of the month.
Sun said Kaisa is not likely to have the means to make a bond interest payment due in April and that all parties should work together to control the potential fallout.
“The deal will be completed if all creditors are rational… but not all people in this situation are rational,” he told a media briefing Tuesday.
Kaisa has been facing a severe cash flow problem since December when Shenzhen authorities blocked it from selling flats amid a corruption investigation.
Since then, the Shenzhen government has been holding talks with several property developers to attract investment in the troubled company, according to Bloomberg.
Last month, Sunac offered to buy 49.3 percent of Kaisa in an 11th-hour deal that staved off a default by Kaisa on a bond interest payment.
And this month, Kaisa asked its onshore creditors to restructure 47.97 billion yuan (US$7.65 billion) of debt by extending payment terms and reducing interest payments.
Sunac has been involved in a similar corporate rescue.
In 2014, it proposed to acquire Greentown China Holdings Ltd. (03900.HK) but the latter walked away from the deal after its chairman said the sale was a mistake.
Sunac said the deal was canceled over “differences in business philosophies”, according to reports.
However, the two companies continue to operate their 50-50 joint venture to develop businesses in the Yangtze River Delta.
This article appeared in the Hong Kong Economic Journal on March 25.
Translation by Vey Wong
[Chinese version 中文版]
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