Wrapup 1: China's Kaisa seeks to extend maturity on $400 mln offshore bond, shares surge

China Aoyuan

25/11/2021 06:03

(Adds analyst comment, Evergrande EV unit, Fantasia, Aoyuan)
    By Clare Jim and Sameer Manekar
    HONG KONG, Nov 25 (Reuters) - China's Kaisa Group Holdings
Ltd  1638.HK  said on Thursday it wants to extend the maturity
of a $400 million bond by a year and a half - part of the
property developer's efforts to avoid a messy default and
resolve a liquidity crisis.
    In a filing, Kaisa said it would exchange its 6.5% offshore
bonds due Dec. 7  KY226867333=  for new notes due June 6, 2023,
at the same interest rate if at least 95% of holders accept.
    Kaisa, which has the most offshore debt among Chinese
developers after China Evergrande Group  3333.HK , missed coupon
payments totalling $88.4 million due on Nov. 11 and 12. The
payments have a 30-day grace period.
    Shares in Kaisa, which resumed trading after suspension on
Nov. 5, were up 18% in afternoon trade with investors cheered by
the firm's attempt to solve payment problems.
    Kaisa said a sharp downturn in the financing environment has
limited its funding sources to meet upcoming maturities.
    "If the exchange offer and consent solicitation are not
successfully consummated, we may not be able to repay the
existing notes upon maturity on Dec. 7, and we may consider
alternative debt restructuring exercise," it said in the filing.
    Chinese developers are facing an unprecedented liquidity
squeeze due to regulatory curbs on borrowing, causing a string
of offshore debt default, credit-rating downgrades and sell-offs
in developers' shares and bonds.
    Kaisa has been scrambling to raise capital by divesting
assets including Hong Kong-listed property management unit,
Kaisa Prosperity Holdings Ltd  2168.HK . 
    It recently sold a land parcel in Hong Kong to a local
investor for HK$3.78 billion ($484.82 million), recovering
around HK$1.3 billion cash after repaying the loans it borrowed
for the land, Reuters reported this week. Kaisa is also selling
another land plot in the city. 
    "Providing solutions and more clarity to the market is
positive; afterall Kaisa's fundamentals are good, if it manages
to strike a deal with creditors it can repay bit by bit to get
past this crisis," said Kington Lin, managing director of Asset
Management Department at Canfield Securities Limited.
    The developer, in a separate filing late on Wednesday, said
it aims to accelerate the disposal of real estate projects and
other high-quality assets to improve liquidity.
    Having missed payments on onshore wealth management products
totalling 1.5 billion yuan ($234.80 million) due in October and
November, Kaisa said it implemented repayment measures for 1.1
billion yuan and is negotiating the remainder with investors.
    The developer also said "certain members of the group" did
not meet repayment obligations under finance agreements
involving bank loans and other borrowing, and that it is
formulating an overall repayment plan.
    Other cash-strapped developers including Evergrande, the
world's most indebted developer which has been stumbling from
deadline to deadline in recent weeks as it grapples with more
than $300 billion in liabilities, are also negotiating with
their creditors and scrambling to raise funds. 
    "Companies want to buy time, while creditors want to recover
their money. Accepting an extension is better than calling the
companies bankruptcy and get nothing back," said Lin. 
    Evergrande electric vehicle (EV) subsidiary's  0708.HK 
onshore unit raised its registered capital by 39% to $3.5
billion, local media reported on Thursday. The Hong Kong-listed
Evergrande New Energy Vehicle said last week that it planned to
raise around $347 million through a share placement.
 urn:newsml:reuters.com:*:nL1N2SD060
    Smaller rival Fantasia Holdings  1777.HK  said on Wednesday
it has reached an agreement with holders of a 1.5 billion yuan
onshore bond maturing in 2023 to pay 20% of a coupon due on
Thursday and the rest a year later.
    But, media reported, that an extension resolution for
another onshore bond due 2023 worth 2.5 billion yuan failed to
pass on Wednesday. 
    Fantasia has missed payment of $205.7 million offshore notes
that were due Oct. 4.  urn:newsml:reuters.com:*:nL1N2S1038
    Separately, Rating agency Fitch downgraded on Wednesday
China Aoyuan's  3883.HK  credit rating to "CCC-" from "B-",
reflecting the reduced chances that the firm will be able to
refinance its $688 million offshore bond due January 2022.
    Aoyuan said on Monday it has extended the redemption date of
onshore asset-backed securities worth 816 million yuan and
engaged Admiralty Harbour Capital Limited and Linklaters as
advisers to assess the company's capital structure and talk to
creditors.    
    Shares of Fantasia were flat, while Aoyuan and Evergrande
edged up 2.3% and 0.7%, respectively. Hang Seng Index  .HSI  was
flat. 
    
($1 = 6.3885 Chinese yuan renminbi)
($1 = 7.7967 Hong Kong dollars)

 (Reporting by Sameer Manekar in Bengaluru and Clare Jim in Hong
Kong; Editing by Edwina Gibbs, Christopher Cushing & Simon
Cameron-Moore)
 ((clare.jim@thomsonreuters.com; +852 2912 6653; Reuters
Messaging: clare.jim.thomsonreuters.com@reuters.net))