New | Developer Sunac China plans to buy Kaisa sites in Shanghai
2.37b yuan deal douses talk that luxury home builder would takeup a major stake
Sunac China plans to acquire four residential and commercial development sites in Shanghai from troubled property developer Kaisa for a total of 2.37 billion yuan (HK$2.93 billion), it said yesterday.
The announcement dispelled Friday's speculation that luxury home builder Sunac China would be Kaisa's white knight and sign an agreement to buy a 49.3 per cent stake in Kaisa from former Kaisa chairman Kwok Ying-shing.
"It is a bit disappointing and far from the market expectation of the arrival of a white knight to save troubled Kaisa," said Kenny Tang Sing-hing, general manager at AMTD Financial Planning. "But the news at least will reduce the anxiety of creditors for a moment. The sale manages to generate cash flow for debt repayment."
In a filing to the Hong Kong stock exchange, Sunac said the four sites would yield a total gross floor area of 553,211 square metres when completed.
The acquisition came one month after Sunac's plan to buy 24.288 per cent stake from three majority shareholders of Greentown China collapsed after the trio, including Greentown founder Song Weiping, decided to sell their stake to China Communications Construction for 6.01 billon yuan.
Sunac said the acquisition agreements and the transactions contemplated would "further expand the market share of the company in Shanghai and strengthen its leading position in the Shanghai property market".
Of the four plots, Sunac will acquire a 100 per cent stake in a Qingpu district residential site, which could yield a total gross floor area of 210,290 square metres, for 1.17 billion yuan. It will pay 609.63 million yuan for 100 per cent of a residential site in Fengxian district for the development of Kaisa No8 phase two.
It will pay 598.6 million yuan for 51 per cent stakes in two projects - the commercial site for the development of the office-retail Pudong Financial Centre in Pudong and a residential site in Jiading district.
Sunac said construction of the four projects had not started.
It said the deals were subject to approval from the central government, regulatory authorities, creditors and shareholders. Kaisa said the sales would incur a loss of 43.9 million yuan.
The Shenzhen government has been seeking investors for Kaisa after it missed a bond payment due on January 8. Kaisa is being investigated over alleged links to a senior official in the city, sources said this month.
Sunac suspended trading of its shares in Hong Kong on Friday pending an announcement. The stock has declined 12 per cent this year. Kaisa shares have been suspended since December 29.
