Struggling Chinese property developer, Kaisa Group Holdings, announced on Monday (2 January) that its chief executive officer, Jin Zhigang, has resigned. The announcement followed a statement notifying shareholders that Kaisa had agreed to sell two units and a majority share in two other units to Sunac China Holdings.
Zhigang’s resignation was effective 1 February, though he will remain an executive director.
The asset sale will raise net proceeds of $380 million (RMB 2.37 billion), taking account of the shareholder loans taken on by the Sunac vehicles buying the assets and related transaction costs.
The company’s financial struggles came to a head when its chairman and other board members resigned triggering a mandatory prepayment clause on a HK$400 million ($51.5 million; €45 million) loan from HSBC. It received a waiver and did not have to prepay the debt but Kaisa also failed to make a $23 million coupon payment on $500 million 10.15 percent 2020 notes.
The asset sale has dismayed creditors and equity investors, who had hoped that Sunac would come onboard with a larger rescue offer, reported Reuters.
Kaisa had current borrowings totalling $3.2 billion, as of 30 June 2014, according to its interim 2014 financial report. The non-current portion of its debt, ranging from two and five years in duration, totalled $3.79 billion.
In a series of stock exchange filings, Kaisa indicated that some of its construction agreements have fallen through, raising concerns about its future cashflows. Several creditors to the company have sought to freeze Kaisa’s assets through the Chinese courts.
At the end of February, Kaisa announced that it had appointed Houlihan Lokey as financial advisor to improve its capital structure.
Last year, Kaisa issued $250 million 8.875 percent 2018 senior notes and $400 million 9 percent 2019 senior notes.