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Thursday, January 27, 2022

Kaisa In Talks With Bondholders With Looming Default Threat

Kaisa Group Holdings Limited, which is a Chinese property developer, has begun talking to its offshore bondholder about extending its deadline for the $400M debt repayment it was due next week. Two sources who have direct knowledge on this matter had stated as such.

Shares in this group had slipped sharply on Friday after it said it had failed to secure the minimum 95% approval needed from offshore bondholders to carry out an exchange offer of its 6.5% offshore bonds due December 7th, without which it could risk default.

The Bondholders Sent A Letter To Kaisa To Extend The Repayment

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A group of offshore bondholders stated that they own 50% of the debt in question and their financial advisor sent Kaisa a letter earlier this week offering extra time to negotiate the repayment of the bond and avoid a default.

These bondholders also presented another offer that would provide $2 billion fresh funding to Kaisa. No major progress has been made on this offer, as stated by the sources, who declined to share their names.

Shares of Kaisa closed down 8.82%, far outpacing the 0.09% decline in Hong Kong’s Hang Seng Index, taking the stock’s plunge so far this year to around 75%.

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Kaisa had hoped to exchange the $400 million 6.5% offshore bonds for new notes due June 6, 2023, at the same interest rate if at least 95% of holders accepted. It did not disclose how many bondholders had consented to the offer.

Kaisa, which became the first Chinese property developer to default on its dollar bonds in 2015, said it had been in talks with representatives of certain bondholders, but that no “legally binding agreement” had yet been entered into.

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