Kaisa chairman returns to Shenzhen to meet regulators, sources say

Kaisa group

19/06/2024 06:11

By Clare Jim and Xie Yu
       HONG KONG, June 19 (Reuters) - The chairman of defaulted
Chinese developer Kaisa Group returned to mainland China from
Hong Kong for the first time in almost a decade to get
regulatory approval for an offshore debt restructuring, two
sources familiar with the matter said.  
    Chairman Kwok Ying Shing travelled to the southern city of
Shenzhen, where Kaisa  1638.HK  is based, for talks with
officials about two months ago and is still there, one of the
industry sources close to the company said. 
    "It is a critical step for the restructuring," the person
said, referring to Kwok meeting regulators as the company faces
a liquidation petition in a Hong Kong court on Monday. 
    "It's a good thing that he's willing to go back and sort
things out."     
    Kwok could not be reached for comment. Kaisa and the
Shenzhen government did not respond to requests for comment. 
    The Kaisa chairman had avoided the mainland since 2015 when
the developer became the first Chinese property company to
default on its dollar bonds after authorities blocked sales at
some of its Shenzhen projects, the two sources said. 
    Kaisa completed its first debt restructuring in 2016, but
defaulted again in late 2021 as China's property sector slipped
into a debt crisis, leading many other developers to default. 
    In 2022 it came under pressure from the Shenzhen government
to come up with a plan to repay investors $2 billion of onshore
wealth management products - a sensitive issue to Chinese
authorities because many mom-and-pop as well as family members
of Chinese officials are investors.
    With $12 billion in offshore debt, Kaisa is China's
second-largest issuer among developers after China Evergrande
Group  3333.HK , whose billionaire Chairman Hui Ka Yan is under
investigation for suspected crimes. 
    Evergrande was also barred by regulators from issuing new
dollar bonds as part of its initial restructuring proposal,
before the world's most indebted developer was ordered to
liquidate by a Hong Kong court in January. 
    Kwok returned to Shenzhen to talk to a government committee
and onshore regulators about its debt revamp plan as it came
close to a deal with bondholders, the two sources said. 
    A greenlight from Chinese regulators is crucial for a
restructuring plan to be implemented.     
    A third source said Kwok had not been detained and was free
to move around in Shenzhen. The sources declined to be named due
to the sensitivity of the matter. 
        The hearing on Kaisa's winding-up petition has been
adjourned several times pending progress of the restructuring
plan, and it is unclear whether Kaisa will be able to reach a
restructuring agreement with bondholders before Monday. 
    Citicorp International, the trustee of an ad hoc group of
bondholders, has been acting as petitioner since March after a
former petitioner withdrew.
    The developer originally told the Hong Kong court in April
that it aimed to iron out the terms by end-May.    

 (Reporting by Clare Jim and Xie Yu in HONG KONG; Editing by
Anne Marie Roantree and Stephen Coates)
 ((clare.jim@thomsonreuters.com;))