China’s Kaisa seeks to extend maturity on $400 mln offshore bond, shares surge

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HONG KONG — China’s Kaisa Group Holdings Ltd 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 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, missed coupon payments totalling $88.4 million due on Nov. 11 and 12. The payments have a 30-day grace period.

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Shares in Kaisa, which resumed trading after suspension on Nov. 5, were up 19% in late-morning 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.

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Kaisa has been scrambling to raise capital by divesting assets including Hong Kong-listed property management unit, Kaisa Prosperity Holdings Ltd.

The developer, in a filing late on Wednesday, also 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. ($1 = 6.3885 Chinese yuan renminbi) (Reporting by Sameer Manekar in Bengaluru and Clare Jim in Hong Kong; Editing by Edwina Gibbs and Christopher Cushing)