Kaisa Group

Kaisa Group Fails to Repay RMB 20M Wealth Management Product Due to Liquidity Crunch; Investors Gather at Shenzhen Headquarters Requiring Management to Provide Settlement Plans

Thu 11/04/2021 01:39 AM
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Kaisa Group has missed payments under a wealth management product totalling about RMB 20 million ($3.128 million) due on Oct. 31, prompting investors in the product gathering at the real estate developer’s headquarters in Shenzhen today, Nov. 4, seeking answers from management, according to two market sources familiar with the matter.

A customer manager of the wealth management product issued a notice to investors last night informing them of the nonpayment, citing a liquidity crunch of the real estate company borrower. “Kaisa is not insolvent and merely encountered liquidity issues,” the manager wrote in the notice. “The quality of Kaisa’s assets is relatively good, and the company continues to sell properties.”

Investors gathered at Kaisa’s headquarters in Shenzhen today, requiring company management to provide settlement plans along with a list of overdue and upcoming payments for all of its wealth management products, according to video clips of the meeting viewed by Reorg.

During an Oct. 18 call with investors, Kaisa denied that it owned any wealth management subsidiary. Management had said during a diligence trip earlier that the company’s outstanding financing products issued by wealth management companies stood at RMB 3 billion.

Bondholders have raised concerns about the amount of outstanding wealth management products given the lack of transparency around such products as they are not included in the company’s financial statements.

Kaisa has previously said that it planned to use proceeds from the September issuance of $300 million 10.5% senior notes due Sept. 7, 2022, to help repay its $400 million notes due Dec. 7. It also said that it expected to collect $50 million proceeds from new projects for sale in Hong Kong and was preparing a total of $140 million internal funds to repurchase the due 2021 notes in the secondary market, as reported.

Kaisa’s $550 million 11.25% senior notes due April 9, 2022, dropped by five points to 34.4 today.

Below is Kaisa Group’s capital structure:
 
Kaisa Group - Pro Forma as of 03/26/2021
 
12/31/2020
  
EBITDA Multiple
(CNY in Millions)
Amount
US$ Amt.
Maturity
Rate
Book
 
Secured bank borrowings
20,982.9
3,208.4
 
 
  
Secured other borrowings
10,248.9
1,567.1
 
 
  
Unsecured bank borrowings
10,589.1
1,619.1
 
 
  
Unsecured other borrowings
10,553.8
1,613.7
 
 
  
Other loans
108.8
16.6
 
 
  
Total Bank and Other Loans
52,483.5
8,025.0
  
3.9x
$400 Million 6.75% Senior Notes Due 2021 1
-
-
Feb-18-2021
6.750%
  
$400 Million 11.75% Senior Notes Due 2021 1
-
-
Feb-26-2021
11.750%
  
$575 Million 7.875% Senior Notes Due 2021
3,760.5
575.0
Jun-30-2021
7.875%
  
$100 Million 10.5% Convertible Senior Notes Due 2021
654.0
100.0
Jul-14-2021
10.500%
  
$400 Million 6.5% Senior Notes Due 2021
2,616.0
400.0
Dec-07-2021
6.500%
  
$550 Million 11.25% Senior Notes Due 2022
3,597.0
550.0
Apr-09-2022
11.250%
  
$1255 Million 8.5% Senior Notes Due 2022
8,207.7
1,255.0
Jun-30-2022
8.500%
  
$600 Million 11.95% Senior Notes Due 2022
3,924.0
600.0
Oct-22-2022
11.950%
  
$700 Million 11.5% Senior Notes Due 2023
4,578.0
700.0
Jan-30-2023
11.500%
  
$450 Million 10.875% Senior Notes Due 2023 2
4,905.0
750.0
Jul-23-2023
10.875%
  
$500 Million 9.75% Senior Notes Due 2023
3,270.0
500.0
Sep-28-2023
9.750%
  
$3119 Million 9.375% Senior Notes Due 2024
20,398.3
3,119.0
Jun-30-2024
9.375%
  
$500 Million 10.5% Senior Notes Due 2025
3,270.0
500.0
Jan-15-2025
10.500%
  
$700 Million 11.25% Senior Notes Due 2025
4,578.0
700.0
Apr-16-2025
11.250%
  
$300 Million 9.95% Senior Notes Due 2025 3
3,270.0
500.0
Jul-23-2025
9.950%
  
Total Offshore Bonds
67,028.5
10,249.0
  
8.9x
$200 Million 10.875% Perpetuals
1,308.0
200.0
 
10.875%
  
Total Perpetuals
1,308.0
200.0
  
9.0x
Total Debt
120,820.0
18,474.0
  
9.0x
Less: Cash and Equivalents
(40,365.7)
(6,172.1)
  
Plus: Restricted Cash
6,248.9
955.5
  
Net Debt
86,703.2
13,257.4
  
6.4x
Operating Metrics
US$ Amt.
LTM Reorg EBITDA
13,454.4
2,057.2
  
 
Liquidity
Plus: Cash and Equivalents
40,365.7
6,172.1
  
Less: Restricted Cash
(6,248.9)
(955.5)
  
Total Liquidity
34,116.8
5,216.6
  
Credit Metrics
Gross Leverage
9.0x
  
Net Leverage
6.4x
  

Notes:
Source: Company filings, Wind, Cbonds; 2020 EBITDA calculated based on company filings
1. Repaid upon maturity
2. Tapped $300 Million on January 20, 2021
3. Tapped $200 Million on January 27, 2021
Pro Forma: For Pro forma, the proceeds from the new bonds were added to cash as the exact use of proceeds for each of the bond raised remains unclear; The repayment for matured debts were subtracted from cash as the exact source of funding used to repay the debt remains unclear
US$ Translation: CNY/USD rate used for USD conversion is 6.54.
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