Kaisa Group Chairman Returns to Mainland China for Debt Restructuring

Kwok Ying Shing has returned to mainland China for the first time, seeking regulatory approval for an offshore debt restructure.
Kwok Ying Shing has returned to mainland China for the first time, seeking regulatory approval for an offshore debt restructure.

Kaisa Group chairman Kwok Ying Shing has returned to mainland China from Hong Kong for the first time in nearly a decade to seek regulatory approval for an offshore debt restructuring.

According to industry sources close to the company, Kwok traveled to Shenzhen, where Kaisa is headquartered, about two months ago to discuss the matter with officials and remains there.

Significance of the Move:

Kwok’s return marks a critical step in the restructuring process as he engages with regulators to address the company’s financial woes. Kaisa faces a liquidation petition in a Hong Kong court, making these talks with Chinese regulators essential for the restructuring plan to proceed.

An industry source stated, “It is a critical step for the restructuring.” This highlights the importance of Kwok’s willingness to engage directly with mainland authorities.

Historical Context:

Kwok had avoided mainland China since 2015, following Kaisa’s default on its dollar bonds after authorities halted sales at some of its Shenzhen projects.

Despite completing its first debt restructuring in 2016, Kaisa defaulted again in late 2021 amid a broader debt crisis in China’s property sector.

In 2022, the company also faced pressure from the Shenzhen government to devise a repayment plan for $2 billion in onshore wealth management products, a significant concern for Chinese authorities given the involvement of many small investors and family members of officials.

Offshore Debt and Regulatory Approval:

Kaisa holds $12 billion in offshore debt, making it the second-largest issuer among Chinese developers, following China Evergrande Group.

Evergrande’s restructuring efforts faced similar challenges, with regulators barring it from issuing new dollar bonds before ordering its liquidation.

Kwok’s discussions in Shenzhen involve a government committee and onshore regulators, crucial steps towards finalizing a debt revamp plan with bondholders. Regulatory approval from Chinese authorities is essential for the restructuring plan’s implementation.

Market Reaction and Future Prospects:

Following the news of Kwok’s return, Kaisa’s shares rose as much as 11.5% before closing 1.5% higher. The implementation of s 2026 dollar notes increases in value.

The hearing on Kaisa’s winding-up petition has been postponed multiple times, pending progress on the restructuring plan. It remains uncertain whether Kaisa will finalize an agreement with bondholders before the court date.

Citicorp International, the trustee of an ad hoc group of bondholders, has been acting as the petitioner since March following the withdrawal of a previous petitioner. Kaisa had initially informed the Hong Kong court that it aimed to finalize the restructuring terms by the end of May.

James Adam

James Adam, a noted business writer for CEO Times Magazine, specializes in insightful industry analysis and executive profiles. Known for his clear, concise style, James offers readers an expert perspective on global business trends and market dynamics.

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