Chinese developer Kaisa and bondholders agree to restructure offshore debt
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The move may help the Chinese developer defend itself against a liquidation petition.
PHOTO: REUTERS
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Hong Kong – Kaisa Group Holdings on Aug 20 announced an offshore-debt restructuring agreement with a key group of bondholders, a step that may help the Chinese developer defend itself against a liquidation petition.
The Shenzhen-based company has been working to restructure its offshore debt since defaulting on US$12 billion (S$15.7 billion) in offshore bonds in late 2021. The restructuring plan also covers other debts, including loans and yuan-denominated asset-backed securities.
Kaisa is the second-largest offshore-debt issuer among Chinese developers after China Evergrande Group, and in 2015 became the first among its peers to default on US dollar bonds.
Many Chinese property developers have defaulted since the sector slipped into a debt crisis in mid-2021, and only a handful of companies have completed their offshore-debt restructuring.
Kaisa said in a filing that it will issue six tranches of senior notes maturing from 2027 to 2032 with 5 per cent to 6.25 per cent cash interest and eight tranches of mandatory convertible bonds maturing from 2025 to 2032, which will be converted into shares in the company based on an allocation ratio.
To facilitate deleveraging and enhance liquidity, the company added that sponsors, including chairman Kwok Ying Shing, may contribute 115 million yuan (S$21 million) of shareholder loan via one or more rights issues.
Kaisa may also elect to propose a management incentive plan to issue up to 3.33 per cent ordinary shares of Kaisa to be distributed to its personnel after a tranche of the new notes has been fully redeemed.
The developer said the key bondholder group, representing more than 34 per cent of its debt covered in the restructuring and over 36 per cent of the debt of unit Rui Jing, has agreed to the plan, and it urged other creditors to sign the agreement by Sept 12 and a 0.1 per cent consent fee in the form of Tranche A new notes will be provided.
Kaisa is due to face a winding-up petition hearing in Hong Kong on Sept 9 and a debt restructuring agreement will help to push back against the petition. The bond trustee of the key bondholder group has acted as petitioner since March after a former petitioner withdrew. REUTERS
