A Hong Kong court has granted Chinese property developer Kaisa Group a seven-week extension to finalize its debt restructuring plan, adjourning a liquidation petition hearing to August 12. The High Court’s decision came after the petitioner, representing a key group of bondholders, agreed to Kaisa’s request for additional time.
Kaisa, based in Shenzhen, has been working on restructuring its offshore debt since defaulting on $12 billion in payments in late 2021. At an April hearing, Kaisa had assured the court it would finalize the terms by the end of May. Justice Peter Ng expressed uncertainty about further adjournments, emphasizing that Kaisa “really has no excuse if [there is] no progress.”
The petitioner, Citicorp International, acts as the bond trustee for an ad hoc group of bondholders (AHG) and has been involved since March after a previous petitioner withdrew. LL Tam, a senior advisor to Kaisa, mentioned that the AHG consists of seven members, requiring time to finalize the details. The developer hopes to sign an agreement within two weeks, involving the issuance of new shares to creditors while maintaining Chairman Kwok Ying Shing as the top shareholder.
By noon, Kaisa’s shares had fallen by 5.8%, compared to a 1% decline in the Hang Seng Mainland Properties Index. Kaisa is the second-largest offshore debt issuer among Chinese developers, following China Evergrande Group. However, in 2015, Kaisa became the first among its peers to default on dollar bonds. It is not alone in facing liquidation, as creditors have filed petitions against other developers, including Country Garden. Earlier this year, China Evergrande was ordered to liquidate.
Recently, Chairman Kwok returned to mainland China from Hong Kong for the first time in almost a decade to seek regulatory approval for the offshore debt restructuring. He has been in Shenzhen for about two months, engaging in talks with a government committee and onshore regulators.
The court’s extension provides Kaisa with a crucial opportunity to solidify its restructuring plan and avoid liquidation. However, the pressure remains high as further delays may not be tolerated. The outcome of these efforts will be closely watched, as it will impact not only Kaisa but also the broader Chinese real estate sector, which is grappling with significant debt challenges.
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