An offshore bondholder group of distressed Kaisa Group is offering up to $2bn to takeover some non-performing loans (NPLs) from Kaisa’s lenders and thus provide the required financing to complete stalled residential projects, as per sources. The NPLs are tied to unfinished housing projects, and the $2bn offer comes at a 20-25% discount. The creditor group is being represented by Lazard and made the offer to the developer’s advisor CITIC Securities. If successful, it would be the first foreign investor takeover of a Chinese developers’ distressed residential assets. Sources said that since most of Kaisa’s projects are in top-tier Chinese cities with resilient house prices, bondholders expect to reap the profits after the completion of the stalled projects. They have also offered to split profits with Kaisa after certain returns, while the extra liquidity recouped could help the developer’s business and operations. This would also be beneficial for its debt restructuring which the company is working on. However, some specifications were made by the creditor group including that the projects must be located in Tier 1 or 2 cities, have no off-balance sheet loans and own permits to pre-sales. Other sources added that the bondholder group offered to take a 20% haircut on Kaisa’s dollar notes and inject equity capital in order to revive onshore projects and advance offshore restructuring talks.
Kaisa’s dollar bonds were flat, trading at 11-12 cents on the dollar.
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