Kaisa Still Lacks Necessary Support for Restructuring Plan

  • Creditors consenting to plan by Feb. 14 were offered 0.5% fee
  • Firm is 1st China developer to have defaulted on dollar bonds

Kaisa Group Holdings Ltd. still lacked the necessary support from creditors for its offshore restructuring plan as of Sunday, said Tam Lai Ling, the Chinese developer’s senior adviser. 

Kaisa needs approval from investors holding 75 percent of its offshore bonds and loans for its plan to restructure debt to proceed. The firm has received no less than 53 percent as of Feb. 14, Tam said by phone. The developer had offered a consent fee of 0.5 percent for investors who supported the plan as of that date, after paying 1 percent for those who consented as of Jan. 24.

Kaisa, which last year became the first Chinese developer to default on dollar notes, is facing challenges from foreign funds as it seeks to convert $2.45 billion of its local and foreign-currency bonds into new dollar-denominated debt. The Shenzhen-based firm already had 53 percent support as of last month. Its proposal clashed with plans from San Francisco-based hedge fund Farallon Capital Management LLC and BFAM Partners. Kaisa has said Farallon’s approach would burden its shareholders and lenders with extra financing needs.

While it still lacks the necessary 75 percent, Kaisa plans to seek court approval to hold a creditors’ meeting to vote on its plan again, Tam said. The firm is confident it could obtain that level of support should such a court-instructed meeting be held, he said. Some creditors didn’t sign on to the agreement for now because they would be restricted from trading Kaisa’s debt if they did, but they have said they would support it during a court meeting, he said.

Jiang Xiaodi, an investor relations officer for Kaisa, said in an e-mail that the company cannot comment before it makes an announcement.

The developer’s $800 million 8.875 percent 2018 notes dropped 0.2 cent to 70.7 cents as of 5:50 p.m. in Hong Kong.

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