Kaisa Group Holdings offers more than $2bn to the Shenzhen developer to meet completion. The offshore bondholders group of cash-strapped, acquires housing projects. Most of Kaisa’s projects are actually the best in Chinese cities. Their housing prices are relatively strong. So, bondholders attempt to gain profits after stalled projects completion. The company also plans to split profits after certain returns. The extra liquidity could support the developer’s business and operations. This is beneficial for the company’s debt restructuring. Kaisa in this case has financing options for the acquisition.
For the financing options, both Evergrande and Kaisa have encountered stiff cash squeeze in the Chinese property sector. This follows the quarter of the economy from the crises in the past years especially in the local markets. Last year, Evergrande and Kaisa defaulted on billions of dollars in bond obligations. It has impacted the enforcement of bondholders digging into long and tiring debt restructuring processes. However, it is still unsure about how many stalled projects the bondholder group’s offer. It is also uncertain how many that could meet the purchasing criteria.
The group offered that despite the criterias, the projects should be in the first or second-tier cities. They do not have off-balance sheet loans and get permits to pre-sale. The company expected that it could somehow revive the onshore projects and improve the offshore restructuring plans. The bondholders in this case have offered to take a 20% cut on Kaisa’s dollar notes. This is to leverage the equity capital. Plus, based on the proposal, Kaisa would improve $550m-$700m from the new shares issuance. Two people close in the transaction reported.
