What’s new: Defaulted developer Kaisa Group Holdings Ltd. unveiled a strategic agreement with a state-controlled builder and one of China’s major bad-debt managers, becoming one of the few big private developers to avoid major liquidity issues.
China Merchants Shekou Industrial Zone Holdings Co. and China Great Wall Asset Management Co. entered into a strategic cooperation agreement with Kaisa to develop real estate, tourism and other businesses in an area including Hong Kong and Macau, the developer said Tuesday.
The strategic cooperation may have been coordinated and brokered by the government, a person close to the deal said.
China Great Wall Asset Management has been a lender to Kaisa. It currently has 2 billion to 3 billion yuan ($314 million–$472 million) of financing balance at the developer.
The background: Kaisa is one of a raft of liquidity-squeezed major property developers in China including China Evergrande Group whose tenuous condition is shaking global bond markets. Known as China’s first developer to default on dollar debt back in 2015, Kaisa was labeled a defaulter again after it failed to repay a $400 million dollar bond that matured Dec. 7.
According to the company’s financial report, Kaisa had total assets of 319.1 billion yuan as of the end of June 2021, with liabilities of 237.7 billion yuan. But like most Chinese developers, Kaisa also has large off-balance sheet liabilities that are difficult to estimate.
Kaisa has stepped up asset sales to raise capital. The company put up for sale 18 properties in Shenzhen, mainly urban renewal projects, with a total valuation of 81.8 billion yuan. The list was expanded to 25 projects in November, but no deals have been made.
Kaisa’s shares have been suspended from trading in Hong Kong since April 1 as required by listing rules because it was not able to publish its 2021 financial results by the March 31 deadline.
Contact reporter Denise Jia (huijuanjia@caixin.com) and editor Bob Simison (bob.simison@caixin.com)
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