DEVELOPER Kaisa Group Ltd., mired in crisis since late last year after the local government in its home base of Shenzhen blocked sales at some of its projects, is seeking to restructure its debts.

    The restructuring plans, which are subject to creditors’ review, involve cutting the interest and extending the maturity on its offshore bonds and convertible bonds, Kaisa said in a statement yesterday. It will also propose amendments to its offshore loans, although details of this have not been revealed.

    The mid-sized developer, with debts of US$2.5 billion, faces the prospect of being the first Chinese mainland property company to default on an offshore debt if it fails two bond coupon payments due this month.

    In early signs, the company was liquidity-constrained. It missed a deadline for a US$26 million coupon payment in January. It narrowly dodged a default by making the payment within the 30-day grace period last month.

    “The company is facing acute liquidity pressure and severe business disruption and so it requires relief from its creditors,” Kaisa said in the statement.

    The company flagged the plans to ask for more time to repay its debts March 6. The Shenzhen city government has not explained why the sales were blocked in the city.

    Kaisa also outlined the benefits of a proposed takeover by rival developer Sunac China, which is subject to the debt restructuring being completed. An onshore debt restructuring plan has already been unveiled.

    Kaisa’s restructuring is being closely watched by offshore investors in Chinese corporate debt as it will be the first property developer to go through the process.

    Kaisa proposes slashing the coupon on its existing offshore bonds and extending their maturity dates by five years, buying the developer time amid a crisis that has seen its shares fall nearly 13 percent last month and a string of senior executives depart. (SD-Agencies)