By P.R. Venkat
Kaisa Group's plan seeking creditors to agree on a debt swap for a US$400 million bond maturing next week failed to get many takers, putting the Chinese real estate developer at a risk of a default.
The company had failed to get minimum required acceptances from creditors by the Dec. 2 deadline in order for it to move ahead with its debt swap plan, Kaisa said Friday.
"As the minimum acceptance amount is a condition to the exchange offer and consent solicitation, which has not been met, the exchange offer and consent solicitation will not proceed and shall lapse automatically," it said.
Late last month, Kaisa sought to swap the senior notes that are Dec. 7, for new bonds paying the same annual 6.5% coupon and maturing in June 2023.
Investors were to get $25 in cash for every $1,000 in face value of notes they exchanged.
The Shenzhen-based company is one of real estate's biggest offshore borrowers after China Evergrande Group, with about US$10.9 billion of dollar bonds outstanding as of end-June.
Beijing's efforts to control developers' mounting debts, falling home sales and the crisis at Evergrande Group have shaken investor confidence. That has pushed down bond prices and effectively shut the market for new offshore debt issuance, making it even harder for property companies to raise the cash they need to repay coming debts.
"If the company is unable to repay the existing notes at its maturity or agree with its holders on alternative arrangements, it would have a material adverse effect on the group's financial condition," Kaisa said Friday.
The developer said that it was exploring all feasible options including asset sales to ease its current liquidity situation.
Shares of Kaisa have also taken a beating. So far this year, the company's stock is down more than 70%.
Write to P.R. Venkat at email@example.com
(END) Dow Jones Newswires