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UPDATE 1-Shares of struggling Chinese developer Kaisa jump after Sunac stake buy
February 9, 2015 / 6:16 AM / 3 years ago

UPDATE 1-Shares of struggling Chinese developer Kaisa jump after Sunac stake buy

(Adds details, comment)

HONG KONG, Feb 9 (Reuters) - Shares of Chinese developer Kaisa Group surged as much as 32 percent in resumed trade on Monday after rival Sunac China Holdings Ltd’s acquisition of a HK$4.55 billion ($586.9 million) stake in the embattled company.

Kaisa has been struggling after a string of senior executives left unexpectedly, authorities blocked sales at some of its projects in the southern Chinese city of Shenzhen late last year and it missed a coupon payment on one of its bonds.

Shares of the company rose to as high as HK$2.1 in early afternoon trade as Sunac China’s purchase of a 49.3 percent stake soothed investor concerns about Kaisa’s future. The stock had halved in a one-month plunge before trading was suspended in December.

Investors have been watching the Kaisa saga closely amid concerns it could be the first Chinese developer to default on its offshore bonds.

If Kaisa shares had not resumed trading on Monday, then holders of its convertible bonds due in December 2015 may have been able to exercise a clause that allows them to demand an early repayment if the stock does not trade for more than 30 days.

That deadline would have been up on February 9, according to analyst calculations.

Kaisa also provided more clarity on its financial standing on Monday, saying in a statement to the Hong Kong stock exchange that it had received notices from creditors, including project partners, demanding immediate repayment of about 28 billion yuan ($4.5 billion).

About 550 million yuan had been frozen in several of its bank accounts, while a total credit of about 725 million yuan had been transferred by relevant banks to set off the loans, it added.

Kaisa missed a coupon payment deadline in January on its bonds due 2020 but subsequently made the payment last week after Sunac China stepped in with the stake purchase.

These bonds, which had struck a low of around 30 cents on the dollar, have recovered most of their losses from their early December level of 105. On Monday, they edged up a quarter of a point to 73.5/76 cents on the dollar.

Shares of Sunac China jumped as much as 6 percent on Monday.

Kaisa, a homebuilder based in the southern Chinese city of Shenzhen, also said it was considering disposing of certain project companies to improve the group’s cash position. ($1 = 7.7529 Hong Kong dollars) ($1 = 6.2485 Chinese yuan renminbi) (Reporting By Anne Marie Roantree, Umesh Desai and Yimou Lee; Editing by Rachel Armstrong)

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