Kaisa secures creditor support, agrees to amend restructuring terms

By Caroline Salls

Pittsburgh, March 17 – Kaisa Group Holdings Ltd. said some of its creditors entered into a support undertaking following negotiations with a group of creditors led by Farallon Capital Asia Pte Ltd. and BFAM Partners (Hong Kong) Ltd. regarding modifications to the economic terms of Kaisa’s restructuring.

According to a company news release, each creditor who holds initial supporting notes as of the record date will receive a cash consent fee equal to 1% of the creditor’s initial supporting notes.

As of Thursday, in excess of 80% of the total outstanding principal amount of offshore claims had been submitted as supporting notes.

Changes made to the restructuring terms in connection with the support undertaking include:

• The company’s convertible bonds will be exchanged for standard, non-convertible high-yield bonds that will be automatically exchanged into new convertible bonds upon the resumption of trading of Kaisa’s common shares on the Hong Kong Stock Exchange and satisfaction of the mandatory exchange conditions, which include the company holding a general meeting of its shareholders to pass all necessary resolutions and to issue new common shares upon the exercise of the conversion rights, as well as the receipt of all necessary approvals in accordance with the relevant rules and regulations of the Hong Kong Stock Exchange;

• Coupon rates on the new high-yield notes, the mandatorily exchangeable bonds and the exchangeable convertible bonds has been increased, with the PIK coupon in each relevant period increased by 0.56% and the cash component of the PIK toggle coupon in each relevant period increased by 0.61%;

• To accommodate scheme creditors who have expressed an interest in an alternative to contingent value rights (CVRs), a new option will be available under which they can elect to receive incremental new high-yield notes in lieu of the CVRs.

Option 1 for scheme creditor treatment will include new high-yield notes and CVRs equal to 7% of the total principal amount of new high-yield notes issued to each scheme creditor. Under option 2, creditors would receive only new high-yield notes, with $1,000 of claims equaling $1,096 in new notes. Under option 3, creditors would receive mandatorily exchangeable bonds; and

• Consenting creditors who submitted their offshore claims as supporting notes before Thursday’s announcement or consents to the amended restructuring support agreement and submits their offshore claims as supporting notes by March 23 will each receive a cash consent fee equal to 1% of the total principal amount of fee-entitled notes.

As previously reported, Kaisa intends to implement the restructuring through inter-conditional schemes of arrangement in the Cayman Islands and Hong Kong.

The company said it is in the process of finalizing scheme documentation and expects to file applications with the Grand Court of the Cayman Islands and the High Court of Hong Kong by March 29 seeking approval to hold scheme approval meetings.

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

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