China’s Kaisa seeks to increase maturity on $400 million offshore bond, shares surge By Reuters

© Reuters. FILE PHOTO: An image reveals the Kaisa Plaza of Kaisa Group Holdings Ltd on a hazy day in Beijing, China, November 5, 2021. REUTERS/Thomas Peter/File Picture

By Clare Jim and Sameer Manekar

HONG KONG (Reuters) -China’s Kaisa Group Holdings Ltd stated on Thursday it needs to increase the maturity of a $400 million bond by a yr and a half – a part of the property developer’s efforts to keep away from a messy default and resolve a liquidity disaster.

In a submitting, Kaisa stated it will change its 6.5% offshore bonds due Dec. 7 for brand spanking new notes due June 6, 2023, on the similar rate of interest if at the least 95% of holders settle for.

Kaisa, which has probably the most offshore debt amongst Chinese language builders after China Evergrande Group, missed coupon funds totalling $88.4 million due on Nov. 11 and 12. The funds have a 30-day grace interval.

Shares in Kaisa, which resumed buying and selling after suspension on Nov. 5, have been up 18% in afternoon commerce with buyers cheered by the agency’s try to unravel cost issues.

Kaisa stated a pointy downturn within the financing surroundings has restricted its funding sources to satisfy upcoming maturities.

“If the change supply and consent solicitation aren’t efficiently consummated, we could not be capable of repay the prevailing notes upon maturity on Dec. 7, and we could take into account different debt restructuring train,” it stated within the submitting.

Chinese language builders are going through an unprecedented liquidity squeeze because of regulatory curbs on borrowing, inflicting a string of offshore debt default, credit-rating downgrades and sell-offs in builders’ shares and bonds.

Kaisa has been scrambling to boost capital by divesting belongings together with Hong Kong-listed property administration unit, Kaisa Prosperity Holdings Ltd.

It just lately bought a land parcel in Hong Kong to an area investor for HK$3.78 billion ($484.82 million), recovering round HK$1.3 billion money after repaying the loans it borrowed for the land, Reuters reported this week. Kaisa can also be promoting one other land plot within the metropolis.

“Offering options and extra readability to the market is constructive; afterall Kaisa’s fundamentals are good, if it manages to strike a cope with collectors it may repay little by little to get previous this disaster,” stated Kington Lin, managing director of Asset Administration Division at Canfield Securities Restricted.

The developer, in a separate submitting late on Wednesday, stated it goals to speed up the disposal of actual property initiatives and different high-quality belongings to enhance liquidity.

Having missed funds on onshore wealth administration merchandise totalling 1.5 billion yuan ($234.80 million) due in October and November, Kaisa stated it applied reimbursement measures for 1.1 billion yuan and is negotiating the rest with buyers.

The developer additionally stated “sure members of the group” didn’t meet reimbursement obligations below finance agreements involving financial institution loans and different borrowing, and that it’s formulating an general reimbursement plan.

Different cash-strapped builders together with Evergrande, the world’s most indebted developer which has been stumbling from deadline to deadline in latest weeks because it grapples with greater than $300 billion in liabilities, are additionally negotiating with their collectors and scrambling to boost funds.

“Corporations wish to purchase time, whereas collectors wish to get well their cash. Accepting an extension is best than calling the businesses chapter and get nothing again,” stated Lin.

Evergrande electrical automobile (EV) subsidiary’s onshore unit raised its registered capital by 39% to $3.5 billion, native media reported on Thursday. The Hong Kong-listed Evergrande New Vitality Automobile stated final week that it deliberate to boost round $347 million via a share placement.

Smaller rival Fantasia Holdings stated on Wednesday it has reached an settlement with holders of a 1.5 billion yuan onshore bond maturing in 2023 to pay 20% of a coupon due on Thursday and the remaining a yr later.

However, media reported, that an extension decision for an additional onshore bond due 2023 value 2.5 billion yuan didn’t go on Wednesday.

Fantasia has missed cost of $205.7 million offshore notes that have been due Oct. 4.

Individually, Ranking company Fitch downgraded on Wednesday China Aoyuan’s credit standing to “CCC-” from “B-“, reflecting the decreased possibilities that the agency will be capable of refinance its $688 million offshore bond due January 2022.

Aoyuan stated on Monday it has prolonged the redemption date of onshore asset-backed securities value 816 million yuan and engaged Admiralty Harbour Capital Restricted and Linklaters as advisers to evaluate the corporate’s capital construction and discuss to collectors.

Shares of Fantasia have been flat, whereas Aoyuan and Evergrande edged up 2.3% and 0.7%, respectively. was flat.

($1 = 6.3885 renminbi)

($1 = 7.7967 Hong Kong {dollars})

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