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By Umesh Desai
HONG KONG, May 15 (Reuters) - Chinese developer Sunac China Holdings has improved its offer to bondholders of Kaisa Group Ltd as it tries to seal a takeover of its indebted rival, but the creditors have not decided whether to accept, two sources close to the matter said.
Sunac has made a restructuring of $2.5 billion of Kaisa’s debts a key condition of its takeover offer and has set a July 31 deadline for a deal.
However, bondholders are debating whether they might be able to get a better offer from Kaisa itself.
Kaisa Chairman Kwok Ying Shing signalled in the media he could improve on Sunac’s initial restructuring proposal. Sunac, meanwhile, has said Kaisa would not survive without the takeover.
The sources, who declined to be identified as they were not authorised to speak to the media, said the new proposal from Sunac implied a price range of 73-74 cents on the dollar compared with the earlier 60 cents.
Sunac and Kaisa officials did not respond to requests for comment.
“From our perspective, we should have dialogue with both sides (Sunac and Kaisa),” said one bondholder. “If Sunac gives a decent deal, it’s safer to go with Sunac as they have the capital, execution ability.”
However, he added that if Sunac was trying to get Kaisa on the cheap, bondholders might be better to wait and see what Kaisa Chairman Kwok Ying Shing could offer.
“There is no concrete plan which way we will go,” he said.
Last month, Kaisa reinstated its founding chairman months after he stepped down and fired three staff members appointed from Sunac, fuelling speculations the takeover would not go through and that Kwok would offer bondholders a better deal.
“If Kwok sees this offer and does not want to sell, he will need to come out with an even better offer. Hope this will turn into a competitive bidding game,” said another bondholder.
Kaisa’s bonds have been on a rollercoaster. Its dollar bonds due 2017 on which it failed to pay a coupon last month, becoming the first Chinese developer to do so, have rallied to around 67 cents on the dollar, double their January lows. The price had plunged to around 30 cents from the end-2014 levels of 110 before its troubles began.
Kaisa’s problems escalated late last year after it was hit by a government block on sales at some of its developments in the southern Chinese city of Shenzhen and the subsequent departure of a string of senior executives.
The company has delayed the publishing of its full 2014 accounts but it disclosed earlier this year its aggregate interest-bearing debt stood at 65 billion yuan ($10.4 billion) at the end of 2014, more than doubling from mid-year. As much as 35.5 billion yuan of this could be due for repayment before the end of 2015. (Editing by Anne Marie Roantree and Mark Potter)