Kaisa Group of China targets to present offshore debt revamp plan in Q4 2022

After missing some debt obligations last year Kaisa is working to restructure its offshore debt. With $12 billion of offshore debt, it is China’s largest issuer of offshore debt among developers after China Evergrande Group.

HONG KONG: Kaisa Group – Chinese property developer plans to finalise an offshore debt restructuring offer in the fourth quarter after China’s party congress in October, Reuters.

Kaisa has been in talk with its creditors to put together a restructuring plan since late last year and it will be the first time the company will put forward a plan to bondholders.

Kaisa planned to propose swapping part of its debt into shares in the company or its development projects, the restructuring plan will propose repaying dollar debt principals in instalments. Kaisa plans to kick off negotiation with a group of offshore creditors represented by investment bank Moelis & Company in late September in which discussions will focus on a framework for the plan, with most details to be decided later on.

“Actual execution won’t be until year-end to first quarter next year,” the person said.

Kaisa declined to comment. Moelis did not respond to request for comment.

China’s ruling Communist Party will hold its five-yearly congress beginning on Oct. 16, which is seen by some in the property sector as an event that could roll out more supportive measures to avert a housing slump and revive the economy.

Such measures could improve the outlook for the sector for creditors and investors.

The crisis in China’s real estate sector, which began with Evergrande missing some repayments mid-last year, has worsened in the past few months, with property investment tumbling 12.3% in July, the fastest rate this year, while the drop in new sales deepened to 28.9%, based on official data.

Kaisa said in a filing in late July that it has entered into “constructive dialogue” with its creditors to facilitate the formulation of a value preserving consensual solution.

The developer said it had made progress onshore, including entering into arrangements with some onshore financial institutions to extend the term of its existing borrowings.

Kaisa has said it hired Houlihan Lokey as its financial adviser and Sidley Austin as a legal adviser.

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