Sunac China to Make Buyout Offer for Troubled Developer KaisaMichelle Yun and Bonnie Cao
Sunac China Holdings Ltd., which bought a 49.3 percent stake in Kaisa Group Holdings Ltd., said it will offer to buy out the troubled Chinese developer at a premium to the last traded price.
Sunac agreed to buy 2.53 billion shares from Kaisa’s founding Kwok family for HK$4.55 billion ($587 million), or HK$1.80 each, and make a general offer at the same amount, according to a joint statement to the Hong Kong stock exchange Friday. That is 13 percent more than Kaisa’s price before the stock was suspended on Dec. 29.
The deal may prevent cash-strapped Kaisa from becoming the first Chinese real estate company to default on dollar denominated bonds. The purchase lets Sunac, based in Tianjin in China’s north, expand to southern cities such as Shenzhen, where Kaisa is based.
“The offeror intends to assist Kaisa to improve its current distressed situation as soon as possible and rebuild market confidence and its reputation,” Sunac and Kaisa said in Friday’s statement.
Sunac will also offer HK$0.68 for each HK$1 face value of Kaisa’s convertible bonds and make offers for Kaisa’s options, according to the statement. Funde Sino Life Insurance Co. will keep its 29.9 percent equity stake in Kaisa, the companies said.
Kaisa is making a coupon payment of $25.6 million on its 10.25 percent dollar bonds that it missed last month, according to a document seen by Bloomberg News on Friday. The amount was due Jan. 8 and Kaisa had a 30-day grace period to pay.
Sunac Chairman Sun Hongbin told Bloomberg News on Feb. 4 that he doesn’t want any creditors to suffer a loss, although it may be difficult to pay all of Kaisa’s onshore debts on time.
Sunac will resume trading in Hong Kong on Feb. 9. Kaisa will remain suspended from trading pending a further announcement, according to the statement. Sunac said it will seek to retain Kaisa’s Hong Kong stock exchange listing.
Kaisa’s fortunes started unraveling in December when the government blocked some of its apartment sales in Shenzhen, the Chinese city neighboring Hong Kong. Sun said Feb. 4 that he didn’t know whether the sales restrictions will be lifted. They are Kaisa’s best assets with gross margins of 50 percent to 60 percent, according to Citigroup Inc.
Shenzhen has been seeking investors for Kaisa, which is being probed over alleged dealings with Jiang Zunyu, Shenzhen’s former security chief, who has been under investigation since October, two people familiar with the matter said last month.