Sunac's bid for stake in troubled Kaisa gets Shenzhen city backing
Shenzhen's city government has backed Sunac China buying a stake in troubled property developer Kaisa, a source said.
Officials had given initial support to Sunac to acquire the founding Kwok family's stake, the source said, adding that city officials had met former Kaisa chairman Kwok Ying-shing in Hong Kong several times since he resigned on December 31.
Sunac had signed an agreement to buy a 49.3 per cent stake in Kaisa from the Kwok family, reported yesterday. An acquisition of that size would imply a total consideration of up to HK$5.2 billion, based on a premium of as much as 30 per cent to Kaisa's last-quoted share price, according to Citigroup estimates.
The Shenzhen government is seeking investors for Kaisa after it missed a bond payment due on January 8. Kaisa would become the first mainland developer to default on a US dollar bond if it does not pay the missed US$23 million coupon when a 30-day grace period expires.
An acquisition by Sunac "will be absolutely good news for Kaisa's creditors because that means the white knight has appeared", said Johnson Hu, a Hong Kong-based property analyst at CIMB Securities Research.
"For Sunac, the market needs to see more specific details as there are still many uncertainties" regarding apartments blocked from being sold, the acquisition price and bank debts, Hu said.
Kaisa's troubles first surfaced in December when local authorities restricted sales of some of its properties, prompting concern among investors of political risks associated with mainland developers. Kaisa is being investigated over alleged links to a senior official in Shenzhen, sources said this month.
Sunac suspended trading of its shares in Hong Kong yesterday pending an announcement. The stock was unchanged at HK$6.94 on Thursday and has declined 12 per cent this year. Kaisa shares have remained suspended since December 29.
