Kaisa Group Holdings announces convertibles, notes restructuring terms

By Caroline Salls

Pittsburgh, Nov. 6 – Kaisa Group Holdings Ltd. announced the key terms of the proposed restructuring of its convertible bonds and existing high-yield notes that were agreed to in principle with a steering committee.

According to a news release, the steering committee has expressed support for the restructuring through a non-binding letter of support.

Kaisa said its discussions with the steering committee are continuing with the intention of implementing the proposed restructuring via inter-conditional schemes of arrangement in the appropriate jurisdictions.

Under the proposed restructuring:

• Kaisa will issue $250 million of series A variable-rate senior notes due four years after the reference date, which is the earlier of the exchange date and Jan. 1, $450 million of series B variable-rate senior notes due 4½ years after the reference date, $550 million of series C variable-rate senior notes due five years after the reference date, $650 million of series D variable rate senior notes due 5½ years after the reference date and series E variable-rate senior notes due six years after the reference date in a principal amount equal to the exchange date principal amount minus the total principal amounts of the other notes;

• Each series of the new high-yield notes may be redeemed at any time before the date that is two years before the maturity date in whole or in part at par plus unpaid interest, at any time during the one-year period from the date that is two years before the maturity date at a redemption price of 101 and at any time during the one-year period from the date that is one year before the maturity date at a redemption price of 102;

• Interest on the new notes will be payable in cash and in kind for the first three years. In year four and after, interest will be payable in cash, with interest on the series A notes at 6.1%, interest on the series B notes at 7.6%, interest on the series C notes at 8.6%, interest on the series D notes at 9.4% and interest on the series E notes at 9.9%;

• The company will issue contingent value rights (CVRs) equal to 7% of the total principal amount of the high-yield notes. The CVRs will remain outstanding until the maturity date of the series E notes;

• Holders of the CVRs will be entitled to the payment of 20% of the face value of the CVRs they hold upon the occurrence of triggering events, including when the 30-Day volume weighted average price (VWAP) of the common shares is at or above HK$1.96, the 30-Day VWAP of the common shares is at or above HK$2.45, when the 30-Day VWAP of the common shares is at or above HK$3.07, when the 30-Day VWAP of the common shares is at or above HK$3.83 and when the 30-Day VWAP of the common shares is at or above HK$4.00;

• A holder of any series of existing high-yield notes will be entitled to new high-yield notes and CVRs. Exchange of existing high-yield notes will be made under orders sanctioning the schemes of arrangement, and before those orders, the company must enter into definitive documentation providing for the restructuring of at least 85% of its onshore debt; and

• Convertible bonds will be restructured so they are due four years after the original maturity date. The new maturity date can be extended to five years after the original date. Interest on the new convertible bonds will be paid in kind and in cash for the first three years, then paid in cash in year four and after at 6%.

Kaisa Group is a Shenzhen, China-based property development company.

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