Chinese property developer Kaisa Group has begun restructuring $12 billion worth of foreign debt. It will be one of China’s most significant debt restructures. The move comes after the group missed a bond payment deadline this week Reuters reported on Dec. 9.
After China Evergrande Group, Kaisa is the second company with a substantial foreign debt that it can’t service.
The corporation defaulted on $400 million in bonds maturing on Dec. 7, triggering default terms on all of its foreign bonds, and given a “Defaulted Default” rating from Fitch.
Kaisa’s debt restructuring will be one of the largest in China.
Kaisa did not say if it has officially defaulted. Still, it is expected that the group will soon sign a non-disclosure agreement (NDA) with the bondholder adviser, investment bank LAZARD.
The NDA will lay the groundwork for further relief and financial solution discussions.
Northland holds more than 25% of Kaisa’s $12 billion in foreign bonds.
Kaisa’s overseas bondholders said they own 50% of the banknotes due on Dec. 7, and they submitted the draft terms of the concession to Kaisa late Monday.
Kaisa had previously proposed a new $2 billion loan to pay off debts both at home and abroad. However, other financial options are in discussion. Kaisa is still negotiating with another group of bondholders.
Kaisa’s default occurred last week when the group sought to exchange bonds due on Dec. 7 for new bonds due on June 6, 2023, at the same interest rate. However, the proposal was not approved by 95% of bondholders.
Kaisa’s shares were suspended from trading on Dec. 8 and are down by 75%. Kaisa stated that it was open to concession talks but declined to comment on the remaining details.