Sunac paid HK$1.80 per share for its Kaisa stake on January 30, according to a filing made on Thursday to the Hong Kong stock exchange where both companies are listed. This represented a 13 per cent premium to the most recent closing price for Kaisa’s shares, which have been suspended since December 29.
Its purchase — for a total cost of HK$4.55bn ($587m) — also exactly matched the number of shares previously held by Kwok Ying Shing, the founder and former chairman of Kaisa.
Trading in Sunac’s stock has also been halted since last week, pending an announcement.
Kaisa’s recent defaults on bond and loan repayments have shaken confidence in the Asian debt markets, where dozens of Chinese developers have together raised tens of billions of dollars from international investors over the past three years. Kaisa has around $2.5bn in outstanding offshore debt.
Problems first emerged in early December when the Shenzhen government imposed a sales ban relating to some of Kaisa’s properties in the city — a move that many analysts suggested was linked to China’s anti-corruption campaign. Kaisa has said it has not been given a reason for the ban.
Later in December, three senior Kaisa executives — including Mr Kwok and the chief financial officer — left the company, prompting downgrades from rating agencies. Kaisa then missed a loan repayment triggered by the resignations, and failed to pay a $23m coupon due on one of its offshore bonds. Chinese creditors have since had many of the company’s assets frozen, while the chief executive departed on February 2.
Hopes of a rescue by Sunac first emerged after stories appeared in local media last week, and they gained momentum after the company requested a share suspension. Last Sunday, Sunac announced it had bought some of Kaisa’s Shanghai assets in a deal worth $380m.
But analysts warned that Sunac’s share purchase could still unravel if it met with objections from the Chinese government. In December, Sunac’s attempt to take a 24 per cent stake in Chinese developer Greentown fell through following opposition from the authorities.
“I still think the ultimate resolution is sure, but the timeline uncertain,” said one credit analyst, who believes Kaisa will be rescued. “They created a messy situation and a white knight will involve many conditions that could fail.”
Sunac chairman Sun Hongbin told Bloomberg on Wednesday that a deal to buy Kaisa shares had been agreed, and that there was a 50 per cent chance it would go through.
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