A group of offshore bondholders is in talks with indebted Chinese developer Kaisa Group Holdings in a bid to obtain a revised restructuring proposal.
The early bird deadline on the company’s proposed restructuring is 20 March but the bondholder group, represented by law firm Kirkland & Ellis, won’t agree by this date, Bloomberg reported. Kirkland & Ellis is working with Kaisa to agree on a revised timeframe and proposal.
Nine funds holding more than 25 percent of around $2.5 billion in offshore bonds, formed a steering group last week, a source told Bloomberg. Another source said Kaisa is likely to miss interest due on its 2017 and 2018 notes, due next week.
Kaisa released details on its proposed offshore debt restructuring on 8 March, which included substantial reductions on interest coupons on five classes of high–yield notes and one class of convertible bonds. New terms would see a payment-in-kind element on all the notes until 2017. The proposal requires the support of holders of more than 50 percent in value of the high–yield notes and more than 66 percent in value of the convertible bonds.
Kaisa disclosed in February total interest-bearing debt of RMB65 billion or HK$82 billion (€9.9 billion; $10.7 billion), as of 31 December 2014. Offshore creditors stand to receive just 2.4 percent of $160 million in a liquidation scenario, Kaisa said in a presentation alongside the proposed restructuring. In early March, Kaisa published details on its onshore debt restructuring.
Hong Kong-listed Sunac China Holdings agreed to buy a 49.25 percent stake in Kaisa in January, conditional on a debt restructuring. That offer appears to be under some strain however, with Wu Jiesi, Sunac’s mergers and acquisitions and restructuring chief, telling bondholders on a call last week that “our patience won’t last more than one or two months”, Bloomberg reported.
Quam Capital Limited has been appointed as the independent financial advisor on the proposed exchange of notes. Houlihan Lokey are financial advisor to Kaisa on its capital structure.
At time of publication, Kirkland & Ellis was not available for comment. Houlihan Lokey declined to comment.