Chinese developer Kaisa Group faces winding-up petition by Singapore hedge fund on yuan-bond payment miss

Chinese developer Kaisa Group Holdings is facing a legal attack from a Singapore hedge fund, one of an array of its offshore creditors, while it pursues a restructuring plan to address more than US$15 billion of borrowings.

Broad Peak Investment Advisers filed a court petition in Hong Kong on July 6 to wind up the company for non-payment of yuan-denominated debt issued by its Shenzhen subsidiary, Kaisa Group said in a stock exchange filing on Monday. The petition will be heard on September 13, it added.

The Singapore-based firm is suing for repayment of a 170 million yuan (US$235 million) bond issued by its unit Kaisa Group (Shenzhen), the filing said. Kaisa Group tumbled 16 per cent to 17.5 HK cents in Hong Kong trading after the disclosure.

Chairman and founder Kwok Ying-shing said Kaisa Group will seek legal advice to oppose the petition and protect its legal rights. The creditor’s action does not represent the interests of other stakeholders and may impair the value of the company, he added.

Kaisa Group had almost 110 billion yuan of borrowings at the end of 2022, and defaulted on bank loans or other borrowings totalling almost 58 billion yuan, according to its annual report published in late April. Its shares had earlier plunged on trading resumption in March, following a year of suspension for failing to release its accounts on time.

Some 50 Chinese developers have defaulted on about US$100 billion worth of offshore bonds over the past two years, according to a JPMorgan report in December, with 39 of them seeking debt workout plans with creditors on US$117 billion of stressed debt.