Kaisa defaults on interest payments on its offshore debt
SHANGHAI-The Chinese property developer Kaisa Group Holdings Ltd said it has defaulted on interest payments on its offshore bonds as it negotiates with its creditors to restructure its debts.
The developer, based in Shenzhen, said in a statement published on the Hong Kong stock exchange website that it made neither a scheduled payment of $16.1 million on $250 million of 2017 notes that was due March 18, nor a payment of $35.5 million on two 2018 notes that was due March 19. Kaisa said it failed to make the payments even after a 30-day grace period.
Kaisa is seeking concessions from its onshore and offshore creditors in order to expedite a bailout by another property developer, Sunac China Holdings Ltd. The company’s troubles date back to November, when authorities in Shenzhen blocked sales of units in 11 Kaisa projects there, cutting into the flow of cash the company needed to meet its obligations.
The developer and local authorities haven’t provided an explanation, but analysts speculated at the time that the blockage could have been meant to pressure Kaisa’s chairman, Kwok Ying Shing, into cooperating with investigations into alleged corruption involving a Shenzhen official.
Mr. Kwok resigned as chairman in late December, but the company said last week that it will reappoint him.
“The company is focused on facilitating the release of its 2014 audited financial results and following that release, will continue its efforts to reach a consensual restructuring of its outstanding debts,” Kaisa said in a statement. “The company hopes to enter into standstill agreements with certain of its offshore debt holders as soon as practicable.”
Kaisa was late in making an interest payment on a bond earlier this year, prompting other creditors to demand repayment. Local courts have also frozen some of Kaisa’s property and bank accounts. Ratings firms have downgraded the company because it defaulted on some of its bank loans after Mr. Kwok’s resignation triggered terms allowing creditors to demand immediate repayment.
Analysts and lawyers said Kaisa’s current default on interest payments was expected, given that the firm is in talks with its creditors about debt-repayment concessions.
Earlier this month, the Shenzhen government partially lifted the sale restrictions on Kaisa’s property units. It didn’t offer an explanation.