An offshore bondholders’ group of cash-strapped Kaisa is prepared to provide up to $2 billion to purchase stalled housing projects of the Shenzhen-based developer in order to accelerate their completion, Investing.com reported.
In the most recent wave of crises to hit the real estate industry over the past year, if it were to be successful, it would mark the first foreign investor acquisition of troubled residential assets owned by Chinese developers. Additionally, it occurs while officials struggle to prevent a mortgage boycott by homeowners in protest of postponed developments.
Behind defaulting on some notes last year, Kaisa Group, the second-largest Chinese developer to issue U.S. dollar bonds after China Evergrande Group, is in the process of restructuring its $12 billion offshore debt.
It is also having trouble raising money to finish its projects and repaying its domestic debt. The offshore bondholder group, represented by the financial advising firm Lazard (NYSE: LAZ) Ltd, offered the developer’s advisor CITIC Securities, an offer to buy the halted projects of Kaisa.
The group of offshore bondholders plans to offer up to $2 billion to purchase some non-performing loans from Kaisa’s lenders connected to incomplete housing projects at a 20 per cent–25 per cent discount and provide the funding required to finish the projects.
It was also reported that the terms provided by the group of offshore creditors are comparable to those that Chinese asset managers previously offered when purchasing the troubled properties of some local developers.