Tag Archives: RECAP1

Business

Spirit ends sale to Frontier as JetBlue talks continue

Leave a comment

July 27 (Reuters) – Spirit Airlines Inc (SAVE.N) canceled its $2.7 billion sale to Frontier Group Holdings Inc (ULCC.O) on Wednesday after Spirit shareholders balked at supporting it, leaving JetBlue Airways Corp (JBLU.O) with an opening to clinch a deal.

The development, first reported by Reuters on Wednesday, came after Spirit pushed back a shareholder vote on the Frontier deal four times, hoping it could muster enough support. Spirit had earlier argued that antitrust regulators were unlikely to clear JetBlue’s $3.7 billion bid.

The outcome was a setback for Frontier and its chairman Bill Franke, who was instrumental in kicking off talks between the sides last year. Franke’s airline-focused buyout firm, Indigo Partners, is a major shareholder in Frontier.

Register now for FREE unlimited access to Reuters.com

Register

“While we are disappointed that Spirit Airlines shareholders failed to recognize the value and consumer potential inherent in our proposed combination, the Frontier board took a disciplined approach,” Franke said in a statement.

A Frontier-Spirit combination would have reshaped the domestic travel landscape and marked the most consequential U.S. airline industry merger since Alaska Air Group bought Virgin America Inc for $2.6 billion in 2016.

JetBlue sees Spirit as an opportunity to expand its domestic footprint at a time when the U.S. airline industry is dogged by labor and aircraft shortages.

A sale of Spirit to Frontier or JetBlue would create the fifth-largest U.S. airline. Negotiations between JetBlue and Spirit are progressing favorably and a deal is possible in the next few weeks, according to people familiar with the matter.

“We are pleased that the merger agreement with Frontier has been terminated and we are engaged in ongoing discussions with Spirit toward a consensual agreement as soon as possible,” JetBlue said in a statement.

But Spirit also could choose to remain independent.

ANTITRUST RISK

Spirit has expressed concern about JetBlue’s Northeast Alliance (NEA) partnership with American Airlines (AAL.O). The U.S. Justice Department filed an antitrust lawsuit against American and JetBlue in September seeking to end the alliance, saying it would lead to higher fares in busy airports in the U.S. Northeast.

JetBlue so far has refused to pull out of the alliance and instead offered other sweeteners like a higher breakup fee and route divestments.

Frontier shares rose 6.4% to close at $11.27 as investors expressed relief that the company exited what had become a bidding war for Spirit. Spirit shares rose 4% to $24.30, while JetBlue shares rose 3.6% to $8.35.

With the end of the proposed Spirit-Frontier tie-up, Spirit will pay Frontier $25 million for merger-related costs that it incurred. As per the terms of the deal, Spirit would owe Frontier an additional $69 million if it ends up striking a merger deal with JetBlue or any other competitor within the next 12 months.

“Now that Spirit Airlines has terminated the Frontier merger agreement, we hope that Frontier management will put aside its merger distraction and invest the same amount of resources and focus to improving conditions at their own airline,” said the Frontier pilots’ union, which is a subset of the Air Line Pilots Association (ALPA).

Register now for FREE unlimited access to Reuters.com

Register

Reporting by Anirban Sen and Greg Roumeliotis in New York, additional reporting by David Shepardson
Editing by Chizu Nomiyama, Will Dunham, Matthew Lewis and David Gregorio

Our Standards: The Thomson Reuters Trust Principles.

Read original article here

Business

Major crypto lender Celsius files for bankruptcy

Leave a comment

July 13 (Reuters) – U.S. crypto lender Celsius Network said on Wednesday it had filed for bankruptcy in New York, becoming the latest victim in the cryptocurrency sector of a dramatic plunge in token prices.

New Jersey-based Celsius froze withdrawals last month, citing “extreme” market conditions, cutting off access to savings for individual investors and sending tremors through the crypto market.

In a court filing at the U.S. Bankruptcy Court for Southern District of New York, Celsius estimated its assets and liabilities as between $1 billion to $10 billion, with more than 100,000 creditors. The company has $167 million in cash on hand.

Register now for FREE unlimited access to Reuters.com

Register

“This is the right decision for our community and company,” said Celsius co-founder and Chief Executive Alex Mashinsky.

Crypto lenders such as Celsius boomed during the COVID-19 pandemic, drawing depositors with high interest rates and easy access to loans rarely offered by traditional banks. They lent out tokens to mostly institutional investors, making a profit from the difference.

But the lenders’ business model came under scrutiny after a sharp sell-off in the crypto market spurred by the collapse of major tokens terraUSD and luna in May.

Another U.S. crypto lender, Voyager Digital Ltd (VOYG.TO), filed for bankruptcy this month after suspending withdrawals and deposits. Singapore’s Vauld, a smaller lender, also froze withdrawals this month. read more

Celsius said in a statement it was not requesting authority to allow customer withdrawals, adding it had asked the court to allow it to continue operations such as paying employees.

Celsius’s move in June to freeze withdrawals prompted state securities regulators in New Jersey, Texas and Washington to launch investigations into the firms. read more

Register now for FREE unlimited access to Reuters.com

Register

Reporting by Maria Ponnezhath in Bengaluru; Editing by Sherry Jacob-Phillips and Edmund Blair

Our Standards: The Thomson Reuters Trust Principles.

Read original article here

Business

Spirit postpones Frontier deal vote, to continue talks with Frontier and JetBlue

Leave a comment

July 7 (Reuters) – Spirit Airlines Inc (SAVE.N) said it has postponed a shareholder vote scheduled for Friday on its $2.4 billion sale to Frontier Group Holdings Inc (ULCC.O) so its board can continue discussions with both Frontier and JetBlue Airways.

Reuters first reported the planned delay.

Over the past few months, JetBlue and Frontier, led by influential airline investor Bill Franke, have repeatedly sweentened their bids for Spirit, seeking to create the fifth largest U.S. airline.

Register now for FREE unlimited access to Reuters.com

Register

The Spirit shareholder vote, which has been delayed twice before, is being pushed back for a third time to give Spirit and JetBlue time to finalize a deal, sources told Reuters, requesting anonymity as the discussions are confidential.

Spirit said it now plans to hold a special meeting on July 15.

JetBlue CEO Robin Hayes said in a statement the airline was “encouraged by our discussions with Spirit and are hopeful they now recognize that Spirit shareholders have indicated their clear, overwhelming preference for an agreement with JetBlue.”

JetBlue submitted a sweetened $3.7 billion all-cash bid last month but Spirit has been reluctant to accept JetBlue’s much more financially attractive offer due to concerns that antitrust regulators may reject it, according to the sources.

JetBlue is already facing a lawsuit from the U.S. Justice Department over its partnership with American Airlines (AAL.O) in the New York and Boston areas.

There is no certainty JetBlue will provide Spirit the necessary assurances on the regulatory front to reach a deal and Frontier, which has already improved its offer, may come back with a new bid, the sources added.

The Frontier deal is also expected to face antitrust scrutiny. But Spirit and some analysts say that deal has a better chance of getting a nod from regulators.

Both bidders view Spirit as an opportunity to expand their domestic footprints and reshape the U.S. airline industry, which is largely dominated by four domestic carriers. An acquisition by either bidder would come at a time when the industry is currently grappling with labor and aircraft shortages.

Last week, Spirit was forced to postpone the shareholder vote until July 8. The sources said it did not have enough shareholders to back the Frontier deal at the time.

Register now for FREE unlimited access to Reuters.com

Register

Reporting by Anirban Sen and Svea Herbst-Bayliss in New York and David Shepardson in Washington; additional reporting by Rajesh Kumar Singh; Editing by Greg Roumeliotis, Bill Berkrot and Edwina Gibbs

Our Standards: The Thomson Reuters Trust Principles.

Read original article here

Business

Airline SAS clashes with striking pilots over U.S. bankruptcy filing

Leave a comment

  • Airline files for Chapter 11 in the United States
  • Filing comes after pilot strike began on Monday
  • Company says strike accelerated bankruptcy filing
  • Attempts to blame staff “beneath contempt” -union
  • Strike grounding roughly half of airline’s flights

STOCKHOLM, July 5 (Reuters) – Scandinavian airline SAS (SAS.ST) has filed for bankruptcy protection in the United States to help cut debt, it said on Tuesday, piling pressure on striking pilots it blames for deepening its financial woes and sending its shares down 10%.

Wage talks between SAS and its pilots collapsed on Monday, triggering a strike that adds to travel chaos across Europe as the peak summer travel season shifts into full gear.

Chief Executive Anko van der Werff said the strike had accelerated its decision to file for Chapter 11 status. But the negotiator for SAS’ Danish pilots said the scope of the filing showed it had been months in the making and called attempts to blame striking staff for triggering it “beneath contempt”.

Register now for FREE unlimited access to Reuters.com

Register

The airline, whose biggest owners are Swedish and Danish taxpayers, said that the strike would have “a negative impact on the liquidity and financial position of the company and, if prolonged, such impact could become material”.

The strike will cost it $10 million to $13 million per day, the company said in its court filing. Sydbank analysts estimated, in a worst-case scenario, it could erase up to half of its cash flow in the initial four to five weeks alone.

“The pilots may well consider themselves pieces in the puzzle that legalizes the management’s Chapter 11 request, and it’s doubtful whether it will bring them back to the negotiating table,” Sydbank analyst Jacob Pedersen said.

“On the other hand, the Chapter 11 request also shows how serious the situation is for SAS.”

Entering Chapter 11 would make it easier for the company to lay off employees, experts say.

Swedish Airline Pilots Association Chairman Martin Lindgren said his members had seen it as inevitable the airline would need to embark on a “reconstruction”.

“It does not affect the strike or our agreements,” he said.

The airline said the U.S. bankruptcy protection filing was aimed at accelerating a restructuring plan announced in February.

“SAS aims to reach agreements with key stakeholders, restructure the company’s debt obligations, reconfigure its aircraft fleet, and emerge with a significant capital injection,” it said.

TALKS WITH LENDERS

View of SAS Airbus A321 and A320neo aircraft at Kastrup Airport parked on the tarmac, after pilots of Scandinavian Airlines went on strike, in Kastrup, Denmark July 4, 2022. TT News Agency/Johan Nilsson via REUTERS

SAS said discussions with lenders regarding another $700 million of financing were “well advanced”.

The strike is grounding roughly half the airline’s flights, affecting some 30,000 passengers per day, it said.

Data from flight tracking website FlightAware showed 232 SAS flights – 77% of those scheduled – had been cancelled on Tuesday, while Oslo’s Gardermoen airport, one of SAS’ hubs, had the world’s highest cancellation rate on the day.

SAS expects to complete the Chapter 11 process in nine to 12 months, it added. SAS shares can be traded as normal during the bankruptcy proceedings.

Wallenberg Investments, SAS’s third biggest shareholder with a 3.4% stake, said it supported the decision and would allow for talks to continue to make the airline competitive.

“For decades, SAS has had too-high costs and too-low productivity compared to its rivals,” it said.

SAS needs to attract new investors and has said to do that it must slash costs across the company, including for leased planes that stand idle because of closed Russian airspace and a slow recovery in Asia. read more

Its finance chief Erno Hilden said in the court filing the airline had so far been unable to renegotiate lease terms, many of which it said were “significantly above” market rates.

SAS had three bonds outstanding , , with a total face value of 5.4 billion Swedish crowns ($519 million). They now trade at deeply distressed levels of around one-third of face value.

The airline predicted its cash balance of 7.8 billion Swedish crowns was sufficient to meet its business obligations in the near term.

Sweden’s government has said no to injecting more cash into the carrier, while Copenhagen has said it may do so if SAS is able attract new investors.

Nordnet analyst Per Hansen said the U.S. application showed SAS needs a fresh start and that it thinks the strike will drag on. “Management and the board want to make it absolutely clear for all stakeholders that the situation is very serious.”

($1 = 10.3216 Swedish crowns)

Register now for FREE unlimited access to Reuters.com

Register

Additional reporting by Johan Ahlander in Stockholm, Essi Lehto in Helsinki, Victoria Klesty in Oslo, Agata Rybska in Gdansk, Jamie Freed in Sydney and Karin Strohecker in London; Writing by Niklas Pollard; Editing by Matt Scuffham, Jan Harvey and Emelia Sithole-Matarise

Our Standards: The Thomson Reuters Trust Principles.

Read original article here

Business

EXCLUSIVE Credit Suisse weighs options to strengthen capital – sources

Leave a comment

The logo of Swiss bank Credit Suisse is seen at its headquarters at the Paradeplatz square in Zurich, Switzerland October 1, 2019. REUTERS/Arnd Wiegmann/File Photo

Register now for FREE unlimited access to Reuters.com

Register

ZURICH, May 30 (Reuters) – Credit Suisse (CSGN.S) is in the early stages of weighing options to bolster its capital after a string of losses have eroded its financial buffers, two people with knowledge of the matter told Reuters.

The size of the increase would be likely to exceed 1 billion Swiss francs ($1.04 billion), but this has not yet been determined, said one of the people, who declined to be named because the deliberations are still internal.

The cash injection would help Switzerland’s second-biggest bank to recover from billions of losses in 2021 and a series of costly legal headaches.

Register now for FREE unlimited access to Reuters.com

Register

Selling shares to some of its major existing investors is the preferred option, but Credit Suisse has not ruled out tapping all shareholders, this person said.

A sale of a business, such as Credit Suisse’s asset management division, is also a possibility, the other person said. The bank had not yet decided on any potential action, they said. Any transaction was envisaged for the second half of this year.

“Credit Suisse is currently not considering raising additional equity capital,” the bank said in a statement.

“The Group is robustly capitalised with a CET1 ratio of 13.8% and a CET1 leverage ratio of 4.3%. Asset Management is an essential part of our group strategy presented last November, with four core divisions.”

The CET1 ratio is a key gauge of a bank’s financial strength.

DEBT DOWNGRADES

Credit Suisse is reeling from billions in losses racked up in 2021 via failed investments, plus the impact of multiple legal cases, including a Bermuda court case that could cost around $600 million. read more

The bank has been trying to reform its risk management culture and also turn the page on a series of scandals, which have prompted several waves of management shake-ups, abrupt departures, and internal and external investigations.

The bank’s shares have fallen by more than a fifth in the past year.

Fitch and Standard & Poors both downgraded their debt ratings for Credit Suisse this month. read more

One of the sources said Swiss financial watchdog FINMA’s annual assessment of big Swiss banks had marked Credit Suisse at 4, unchanged from last year, the lowest possible grade.

One of the watchdog’s main concerns was capitalisation at group level, this source said.

FINMA declined to comment.

The deliberations over a capital boost come only a year after the Swiss bank raised around 1.75 billion Swiss francs from investors via mandatory convertible notes. read more

In April, Credit Suisse had played down the need for fresh capital even as it reported a first-quarter loss that intensified its financial pain. read more

Credit Suisse executives said at the time capital could remain constrained over the next six months as the bank continues to make significant outlays towards compliance and risk, but a source familiar with the matter said a capital increase was not under consideration at the time.

The bank’s core capital ratio weakened to 13.8% at the end of the first quarter 2022 from 14.4% at the end of 2021.

But a new capital increase would bolster Credit Suisse’s balance sheet and also send a positive signal. If well-known investors provided the bank with new cash, this could be seen as a sign of confidence, one of the sources said.

($1 = 0.9572 Swiss francs)

Register now for FREE unlimited access to Reuters.com

Register

Reporting by Oliver Hirt. Editing by Jane Merriman

Our Standards: The Thomson Reuters Trust Principles.

Read original article here

Business

Hyundai Motor Group to invest more than $10 billion in U.S. up to 2025

Leave a comment

SEOUL, May 22 (Reuters) – Hyundai Motor Group said on Sunday it would invest an additional $5 billion in the United States by 2025 to strengthen collaboration with U.S. firms in advanced technology.

The investments, announced during a visit to Seoul by President Joe Biden, are for robotics, urban air mobility, autonomous driving and artificial intelligence, the group said.

Hyundai Motor Group, which houses Hyundai Motor Co (005380.KS) and Kia Corp (000270.KS), on Friday announced plans to invest $5.5 billion in Georgia to build electric vehicle (EV) and battery facilities. read more

Register now for FREE unlimited access to Reuters.com

Register

Hyundai’s new EV and battery manufacturing facilities will be based in the southern “right to work” state, where labour unions are less prevalent and cannot require workers to join.

Biden, a Democrat, has described himself as the most pro-union president in history. But the deal, announced by Georgia’s Republican governor, showed the compromises the president may have to make as he woos investment overseas.

“Hyundai and any company investing in the United States would benefit greatly from entering into partnerships with some of the most highly skilled, dedicated, and engaged workers in the world, anywhere you can find; and that is American union members,” Biden said.

“Every venture to manufacture electric vehicles and electric vehicle batteries would be made stronger by a collective bargaining relationship with our unions.”

Hyundai Motor Group Executive Chair Euisun Chung did not comment on U.S. unions.

The new investment brings its planned U.S. total through 2025 to about $10 billion, above the $7.4 billion it announced last year.

The world’s third-biggest automaker by vehicles sales did not say where in the United States the additional $5 billion would be invested.

The auto group said on Wednesday it would invest 21 trillion won ($16 billion) through 2030 to expand its EV business in South Korea. read more

($1 = 1,273.5900 won)

Register now for FREE unlimited access to Reuters.com

Register

Reporting by Trevor Hunnicutt, Heekyong Yang and Jack Kim; Editing by Bradley Perrett and Lisa Shumaker

Our Standards: The Thomson Reuters Trust Principles.

Read original article here

Business

U.S. offshore wind auction attracts record-setting bids

Leave a comment

Feb 23 (Reuters) – The largest ever U.S. sale of offshore wind development rights – for areas off the coasts of New York and New Jersey – attracted record-setting bids on Wednesday from companies seeking to be a part of President Joe Biden’s plan to create a booming new domestic industry.

It is the first offshore wind lease sale under Biden, who has made expansion of offshore wind a cornerstone of his strategy to address global warming and decarbonize the U.S. electricity grid by 2035, all while creating thousands of jobs.

With bidding still underway, the auction was on track to easily top the $405 million U.S. offshore wind auction record set in 2018, according to updates posted on the U.S. Bureau of Ocean Energy Management’s (BOEM) web site.

Register now for FREE unlimited access to Reuters.com

Register

After 11 rounds, bidding stood at a record-setting $250 million for a single lease 32 miles (51.5 km) off the coast of New Jersey. The government had identified that 114-acre area – the largest offered in the sale – as being capable of producing power for more than 485,000 homes.

The previous record amount paid for a U.S. offshore wind lease was $135.1 million in 2018 for a lease off the coast of Massachusetts.

High bids on each of the other five areas in the auction ranged between $12.6 million and $134.3 million as of Wednesday afternoon.

The auction’s scale marks a major step forward for offshore wind power in the United States, which has lagged European nations in developing the technology. Currently, the United States has just two small offshore wind facilities, off the coasts of Rhode Island and Virginia, along with two additional commercial-scale projects recently approved for development.

BOEM, which has not held an auction for wind leases since 2018, is offering 488,201 acres (197,568 hectares) in shallow waters between New York’s Long Island and New Jersey, an area known as the New York Bight.

The area is 22% smaller than what was initially proposed last summer due to concerns about the developments’ impact to commercial fishing and military interests.

‘ENOUGH WIND TO POWER MILLIONS OF HOMES’

The sale’s 25 approved bidders include entities controlled by Equinor ASA (EQNR.OL), Avangrid Inc (AGR.N), BP Plc and Eletricite de France SA (EDF.PA), according to government documents. Each bidder may only win one lease.

The energy generated from the newly offered areas could one day power nearly 2 million homes, the administration has said.

Last year, the Biden administration set a goal of installing 30 gigawatts (GW) of offshore wind by 2030 along the nation’s coastlines. Much of the current development is happening in waters off of Northeastern states.

New York and New Jersey have set targets of building more than 16 GW of offshore wind by 2035, and Wednesday’s lease areas – which lie between 20 and 69 nautical miles off the coast, according to BOEM – could deliver more than a third of that capacity.

“That’s enough wind to power millions of homes,” Ed Potosnak, executive director of the New Jersey League of Conservation Voters, said in an interview. “That’s a big deal in a state with about nine million people.”

Not everyone supports offshore wind development. The Biden administration’s ambitions have stoked concerns among commercial fishermen and coastal communities about harm to their livelihoods and property values.

In January, a group of New Jersey residents sued BOEM over its leasing plans for the New York Bight. The group, from the summer colony of Long Beach Island, is concerned about the aesthetic impacts of the turbines and potential lost tourism.

Greg Cudnik, owner of a fishing charter boat business on Long Beach Island, worries about what thousands of wind turbines will do to the ocean habitat.

“For all this that’s taking place and all this that is put in jeopardy, to me, I don’t see the net benefit,” Cudnik said.

Register now for FREE unlimited access to Reuters.com

Register

Reporting by Nichola Groom in Los Angeles and Christine Kiernan in Ship Bottom, New Jersey; Editing by Bill Berkrot

Our Standards: The Thomson Reuters Trust Principles.

Read original article here

Business

China Evergrande braces for debt deadline after doubting ability to pay

Leave a comment

  • Evergrande says no guarantee it can make $82.5 mln debt payments
  • Says creditors have also demanded $260 mln repayment
  • Authorities summon chairman; shares drop 15% to 11-year low
  • Any collapse could ripple through property sector and beyond

HONG KONG, Dec 6 (Reuters) – After lurching from deadline to deadline, China Evergrande Group (3333.HK) is again on the brink of default, with pessimistic comments from the property developer raising expectations of direct state involvement and a managed debt restructuring.

Having made three 11th-hour coupon payments in the past two months, Evergrande will again face the end of a 30-day grace period on Monday, with dues this time at $82.5 million.

But a statement late on Friday saying creditors had demanded $260 million and that it could not guarantee enough funds for coupon repayment prompted authorities to summon its chairman – and wiped over a sixth off its stock’s market value on Monday.

Register now for FREE unlimited access to reuters.com

Register

Evergrande was once China’s top-selling developer but is now grappling with more than $300 billion in liabilities, meaning a collapse could ripple through the property sector and beyond.

Its statement on Friday was followed by one from authorities in its home province of Guangdong, saying they would send a team to Evergrande at the developer’s request to oversee risk management, strengthen internal control and maintain operations.

The central bank, banking and insurance regulator and securities regulator also released statements, saying risk to the broader property sector could be contained.

Short-term risk from a single real estate firm will not undermine market funding in the medium or long term, said the People’s Bank of China. Housing sales, land purchases and financing “have already returned to normal in China”, it said.

Analysts said authorities’ concerted effort signalled Evergrande has likely already entered a managed debt-asset restructuring process to reduce systemic risk.

Morgan Stanley in a report said such a process would involve coordination between authorities to maintain normal operation of property projects, and negotiation with onshore creditors to ensure financing for projects’ development and completion.

Regulators would also likely facilitate debt restructuring discussion with offshore creditors after business operations start to stabilise, the U.S. investment bank said.

After the flurry of statements, Evergrande’s stock slid as much as 15% on Monday to HK$1.92 – its lowest since May 2010.

Its November 2022 bond – one of two bonds that could go into default on non-payment on Monday – was trading at the distressed price of 20.787 U.S. cents on the dollar, compared with 20.083 cents at the end of Friday.

LIQUIDITY SQUEEZE

Evergrande has been struggling to raise capital by disposing of assets, and the government has asked Chairman Hui Ka Yan to use his wealth to repay company debt. read more

The firm is just one of a number of developers facing an unprecedented liquidity squeeze due to regulatory curbs on borrowing, causing a string of offshore debt defaults, credit-rating downgrades and sell-offs in developers’ shares and bonds.

To prevent further turmoil, regulators since October have urged banks to relax lending for developers’ normal financing needs and allowed more real estate firms to sell domestic bonds. read more

To free up funds at banks, Premier Li Keqiang on Friday said China will cut the bank reserve requirement ratio (RRR) “in a timely way” to increase support for the real economy. read more

Still, the government may have to significantly step up policy-easing measures in the spring to prevent a sharp downturn in the property sector, Japanese investment bank Nomura said in a report published on Sunday.

CONTAGION

Smaller developer Sunshine 100 China Holdings Ltd (2608.HK) on Monday said it had defaulted on a $170 million U.S. dollar bond due Dec. 5 “owing to liquidity issues arising from the adverse impact of a number of factors including the macroeconomic environment and the real estate industry”. read more

The delinquency will trigger cross-default provisions under certain other debt instruments, the developer said.

Its shares fell nearly 3%.

Last week, Kaisa Group Holdings Ltd (1638.HK) – the largest offshore debtor among Chinese developers after Evergrande – said it had failed to secure approval from offshore bondholders to carry out an exchange offer of its 6.5% offshore bonds due Dec. 7 , without which it said it would risk default.

The developer has begun talks with some of the offshore bondholders to extend the deadline for the $400 million debt repayment, sources have told Reuters. read more

Smaller rival China Aoyuan Property Group Ltd (3883.HK) last week also said creditors have demanded repayment of $651.2 million due to a slew of credit-rating downgrades, and that it may be unable to pay due to a lack of liquidity. read more

Register now for FREE unlimited access to reuters.com

Register

Reporting by Clare Jim in Hong Kong; Additional reporting to Shuyan Wang in Beijing; Editing by Anne Marie Roantree and Christopher Cushing

Our Standards: The Thomson Reuters Trust Principles.

Read original article here

Business

China’s Kaisa fails to get bondholders nod to extend maturity, risks default

Leave a comment

A sign of the Kaisa Plaza, a real estate property developed by Kaisa Group Holdings, is seen near its apartment building in Beijing, China December 1, 2021. REUTERS/Tingshu Wang

Register now for FREE unlimited access to reuters.com

Register

  • Kaisa $400 million 6.5% notes due on Dec. 7
  • Kaisa still looking at asset sales, extending debt
  • Evergrande’s 30-day grace period for missed coupon on Dec. 6

Dec 3 (Reuters) – Chinese property developer Kaisa Group Holdings Ltd (1638.HK) said on Friday it failed to secure the minimum 95% approval it needed from offshore bondholders to extend the maturity of a $400 million note due next week, raising the risk of a default.

With the Chinese property sector gripped by an unprecedented liquidity squeeze, Kaisa now faces the possibility of defaulting on its 6.5% offshore bonds due Dec. 7 and drawing renewed focus on other developers also staring at a wall of offshore debt maturing over the next few months.

Kaisa had hoped to exchange the $400 million 6.5% offshore bonds for new notes due June 6, 2023 at the same interest rate if at least 95% of holders accepted. It did not disclose how many bondholders had consented to the offer.

Register now for FREE unlimited access to reuters.com

Register

Shares of the embattled property firm dropped 9.8% to a record low of HK$0.92, taking the stock’s plunge so far this year to around 75%.

The firm, which became the first Chinese property developer to default on its dollar bonds in 2015, said it had been in talks with representatives of certain bondholders, but no “legally binding agreement” had been entered into yet.

“To ease the current liquidity issue and reach an optimal solution for all stakeholders, the company is assessing and is closely monitoring the financial condition and cash position of the group,” it said on Friday.

It added that it still exploring selling assets and extending or renewing debt obligations, but cautioned there was no guarantee it would be able to meet the Dec. 7 maturity.

A failure to repay or reach an agreement with creditors would have “a material adverse effect” on Kaisa’s financial condition, it said.

Kaisa is the second-largest dollar bond issuer among China’s property developers after China Evergrande Group (3333.HK), which has more than $300 billion in liabilities, and like the others has been scrambling to raise capital to stave off a default.

Reuters reported last month that the firm was looking to sell its Hong Kong-listed property management unit, Kaisa Prosperity Holdings Ltd (2168.HK).

Last week, in its notes exchange offer, Kaisa said it could consider a debt restructuring exercise if bondholders did not approve the extension of maturity.

Kaisa’s failure in getting a much-needed lifeline from its creditors will also weigh on other smaller developers that are looking to avoid long and messy litigation and restructuring processes, analysts have said.

Also on the horizon is the end of a 30-day grace period for Evergrande, which has been narrowly avoiding defaults, after it failed to pay coupons totalling $82.5 million due on Nov. 6.

Register now for FREE unlimited access to reuters.com

Register

Reporting by Sameer Manekar in Bengaluru; Writing by Sumeet Chatterjee and Nikhil Kurian Nainan; Editing by Shri Navaratnam and Christopher Cushing

Our Standards: The Thomson Reuters Trust Principles.

Read original article here