China property

Chinese developer Kaisa in push to end share trade suspension, says it will release 2014/15 results by April

HK toy king’s share purchase helps troubled firm cross the necessary listing threshold

PUBLISHED : Thursday, 02 March, 2017, 10:45pm
UPDATED : Friday, 03 March, 2017, 11:03am

Troubled Chinese property developer Kaisa Group, whose shares have been suspended from trading in Hong Kong for almost two years, said it aimed to release its 2014 and 2015 annual results by the end of March, clearing the last hurdle for trade resumption.

“We target to announce the financial result from 2014 to 2016 first half, by the end of March,” Tam Lai Ling, a senior adviser and former vice chairman of Kaisa, told the South China Morning Post in a phone interview on Thursday.

“The company has achieved other conditions for resumption [of share trading], publishing the financial results is the last step,” he said.

The developer, which in 2015 became the first Chinese developer to default on its US dollar-denominated bonds, has been struggling to restructure its 65 billion yuan (US$9.44 billion) debt, prepare delayed financial statements, and improve the percentage of shares owned by the public, in a bid to resume trading of its shares.

Kaisa’s debt restructuring passes critical stage

On February 23, Hong Kong billionaire Francis Choi Chee-ming bought a 4.23 per cent stake in Kaisa for 5 billion yuan through Da Chang Investment Company, bringing his combined holding to 5.21 per cent.

The deal helped Kaisa remain within the listing requirement that the public control no less than 25 per cent of shares.

“I have been friends with chairman Kwok for many years,” said Choi (also known as Hong Kong’s toy king) in a telephone interview.

The tycoon said he has strong confidence in Kaisa’s prospects given that it owns a number of prime property assets in China.

Choi paid HK$2.3 per share for 217 million shares, a nearly 50 per cent premium from Kaisa’s final closing price on before the suspension of trade.

Kaisa appointed Liu Xuesheng as independent non-executive director on February 28 to meet the minimum three independent non-executive directors requirement under listing rules.

Tam added that the company has completed domestic and offshore debt restructurings.

Once the financial statements have been submitted, the Hong Kong Stock Exchange will rule on whether the company can resume trading.

Trading of the Shenzhen-based developer has been halted since March 2015 when it delayed the publication of its 2014 annual results.

Chairman Kwok Ying-shing resigned on December 31, 2014 amid suspected links to Jiang Zunyu, a high ranking official in Shenzhen who has been under investigated by the Communist Party’s Central Commission for Discipline Inspection since October 2014.

Shenzhen officials imposed a sales ban on some of Kaisa’s projects in late 2014 owing to potential business irregularities.

Kaisa was on the verge of bankruptcy due to liquidity crunch at the time and once planed to sell its controlling stake to rival developer Sunac China.

Kwok unexpectedly returned to the post as chairman to helm Kaisa in April, 2015.

Former Kaisa chief Kwok Ying-shing returns as chairman

Authorities in Shenzhen have since lifted restrictions on the sales of most Kaisa projects.

With presence in some biggest cities including Shenzhen, Guangzhou and Shanghai, the developer achieved contracted home sales of 29.8 billion yuan in 2016.

The company had said previously that it would seek to have its shares resume trading by January 2017.

PWC resigned as auditor of Kaisa last year, saying it wasn’t able to obtain information about a number of unusual transactions.

In a statement in December, Kaisa announced that its advisor FTI Consulting has found during fiscal years 2013 and 2014 that Kaisa did not disclose to PWC a 35.2 billion yuan outstanding loan, which led to significant accounting errors.