Some bondholders of China developer Kaisa tap adviser to help recover dues -source (updated)

Kaisa Prosperity Holdings

23/11/2021 08:26

(Changes key word used by media customers; adds Tuen Mun land
sale, China property shares, other details)
    By Anshuman Daga and Clare Jim
    SINGAPORE/HONG KONG, Nov 23 (Reuters) - Some offshore
bondholders of embattled Chinese developer Kaisa Group  1638.HK 
who did not receive coupon payments this month have tapped
investment bank Moelis & Co  MC.N  to advise them on the matter,
a source with direct knowledge told Reuters on Tuesday.    
    Kaisa, which has the most offshore debt of any Chinese
developer after China Evergrande Group  3333.HK , has not paid
coupons totalling over $59 million due on Nov. 11 and 12, with
30-day grace periods for both.
    Bloomberg reported earlier on Tuesday that an ad hoc group
of offshore bondholders is also seeking advice from lawyers at
Kirkland & Ellis, besides Moelis.
    Kaisa has been scrambling to raise capital by divesting some
of its assets including some land developments and the Hong
Kong-listed property management unit  2168.HK . Reuters reported
last month that Kaisa was seeking buyers for two residential
sites in Hong Kong.  urn:newsml:reuters.com:*:nL1N2RP0FH
    A separate source with direct knowledge of the matter said
Kaisa recently sold the Hong Kong land parcel in Tuen Mun for
HK$3.78 billion ($485.09 million) to local investor Francis
Choi, a friend of Kaisa's chairman Kwok Ying Shing.
    After repaying the loans for the land which Kaisa bought for
HK$3.5 billion early last year, the Chinese developer will be
able to book a profit of HK$1.3 billion, the source said. 
    CITIC and Bank of East Asia will provide a total of HK$4
billion financing to Choi, while Huatai Financial will lead a
$150 million mezzanine loan. 
    Kaisa declined to comment on bondholders hiring advisors and
the land sale. There was no immediate comment from Moelis and
Kirkland & Ellis to a Reuters query sent outside U.S. working
hours. Choi could not be reached for comment.
    The Shenzhen-based developer, which was downgraded by Fitch
last week to "C" from "CCC-" on the missed coupon payments, has
another big test coming up - a $400 million maturity on a 6.5%
dollar bond due on Dec. 7. 
    Kaisa has also missed some payments on its wealth management
products onshore, and this month it pleaded for help from
creditors and said it will not pay interim dividends.    
    Chinese developers are facing an unprecedented liquidity
squeeze due to regulatory curbs on borrowings, causing a string
of offshore debt defaults, credit rating downgrades and
sell-offs in some developers' shares and bonds in recent months.
    Evergrande, the world's most indebted developer which is at
the centre of the crisis, has been stumbling from debt-repayment
deadline to deadline as it grapples with more than $300 billion
in liabilities. Moelis and Kirkland & Ellis are advising a group
of offshore bond holders of Evergrande.  urn:newsml:reuters.com:*:nL1N2S903H
   Market participants and analysts expect Chinese policymakers
to ease some tightening measures in an effort to avoid a further
liquidity crunch in the sector. 
    Some Chinese banks have been told by financial regulators to
issue more loans to property firms for project development, two
banking sources with direct knowledge of the situation told
Reuters on Monday.  urn:newsml:reuters.com:*:nL4N2SD16L
    However, the authorities have yet to publicly give any
signal that they will relax the "three red lines" - debt ratio
requirements introduced by the central bank last year that
developers must meet to get new bank loans. 
    Property shares generally gained on Tuesday, with top
players Country Garden  2007.HK  and Sunac China  1918.HK 
rising over 2%, and Agile Group  3383.HK  and R&F Properties
 2777.HK  up over 5%. Evergrande jumped as much as 11.3%.
    
    ($1 = 7.7923 Hong Kong dollars)

 (Additional reporting by Scott Murdoch; Editing by Muralikumar
Anantharaman & Shri Navaratnam)
 ((clare.jim@thomsonreuters.com; +852 2912 6653; Reuters
Messaging: clare.jim.thomsonreuters.com@reuters.net))