China's Kaisa plans to sell property management unit, Hong Kong sites - sources

Kaisa Prosperity Holdings

29/10/2021 07:42

(Adds details, property market context, share reaction)
    By Clare Jim and Kane Wu
    HONG KONG, Oct 29 (Reuters) - Kaisa Group Holdings Ltd
 1638.HK  is seeking buyers for its Hong Kong-listed property
management unit and two residential sites in the city, people
with knowledge of the matter said, as it scrambles to meet a
wall of debt repayments.
    Kaisa plans to sell its entire 67.18% stake in Kaisa
Prosperity Holdings Ltd  2168.HK , a company with a market value
of around HK$2.4 billion ($310 million), two sources said.
    No clear buyers have emerged, one source said.
    The Shenzhen-based developer is also putting up for sale two
residential project sites in Hong Kong it acquired last year,
according to another source and sale presentation documents seen
by Reuters.
    Kaisa bought the land in Tuen Mun for HK$3.5 billion, and it
said in its interim report published in September that it owns a
50% interest in a Kai Tak site worth HK$7 billion.
    Kaisa did not comment on the plans to divest its stake in
the property management unit and did not immediately respond to
a query about the residential site sales.
    The sources asked to be named as the company's divestment
plans were not public.
    Kaisa has the most offshore debt coming due over the next
one year of any Chinese developer, after embattled China
Evergrande Group  3333.HK , which - with more than $300 billion
in liabilities - is at the centre of a stifling liquidity crisis
in China's $5 trillion property sector.
    Evergrande made an interest payment for an offshore bond
before a grace period expired on Friday, two people with direct
knowledge of the matter said, narrowly averting catastrophic
default for the second time in a week.  urn:newsml:reuters.com:*:nL1N2RO3H1
    
    'ASSET DISPOSALS'
    Kaisa's share price was down 4.2% in afternoon trading,
compared with a decline of 2.5% before Reuters reported its
plans to sell assets. Kaisa Prosperity jumped almost 7% after
the news.
    Its borrowings totalled 123.8 billion yuan ($19.37 billion)
at the end of June, up from 121.5 billion yuan at the end of
2020, the interim report showed. Of that debt, 71.7 billion yuan
was dollar senior notes.
    The developer has around $3.2 billion in offshore senior
notes due in the next 12 months, according to credit rating
company S&P, with the next maturity worth $400 million falling
on Dec. 7. 
    Kaisa also has around $1 billion in offshore interest to pay
every year, analysts said.
    Rating firms S&P and Fitch downgraded Kaisa again on
Wednesday, both to "CCC+", citing its weakening liquidity,
sending its shares to their lowest since their debut in December
2009.  urn:newsml:reuters.com:*:nL1N2RO09O
    "In our view, the company will need to rely on asset
disposals and successfully improving its capital structure to
avoid defaulting on its debt commitments," S&P said, citing
disposals in project in the mainland and Hong Kong.
    
    ($1 = 7.7770 Hong Kong dollars)
    ($1 = 6.3908 Chinese yuan renminbi)
    

 (Reporting by Clare Jim and Kane Wu; Editing by Sumeet
Chatterjee and William Mallard)
 ((clare.jim@thomsonreuters.com; +852 2912 6653; Reuters
Messaging: clare.jim.thomsonreuters.com@reuters.net))