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Sunac China to buy 49.3 percent stake in Kaisa - Caixin

Here's where sovereign wealth funds are moving their money to
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Here's where sovereign wealth funds are moving their money to

Sunac China Holdings has agreed to buy a 49.3 percent stake in troubled Chinese property developer Kaisa Group, a report in financial news magazine Caixin said on Friday, citing an unidentified senior company executive.

The report emerged even as Sunac announced a share trading suspension pending the release of an "announcement containing inside information in relation to the company."

The Caixin report said the firm would buy the stake from the Kwok brothers, who formally control the developer, and that the two sides had recently signed an agreement. It did not give a dollar value for the deal.

While Sunac's reported acquisition is seen as a positive move for Kaisa stakeholders, analysts said it is unlikely to become a template for other struggling property developers, due to the relatively good quality of Kaisa's assets.

A Sunac spokesman in Hong Kong declined to comment on the report and a call to Kaisa's office went unanswered.

Kaisa is struggling after a string of senior executives left unexpectedly, authorities blocked sales at some of its projects in Shenzhen late last year and it missed a coupon payment on one of its bonds.

Since these troubles began last month, Kaisa's bonds have lost as much as two-thirds of their value. In recent sessions, there has been a recovery though amid reports there could be a buyer of the company's assets.

Earlier this week, financial news website Tencent Finance reported that Sunac, which last month terminated a deal to acquire a majority stake in developer Greentown China Holdings, was in talks to buy part of Kaisa.

In volatile trade, Kaisa bonds that are due to mature in 2020 and on which the coupon deadline was missed, leapt to an indicated quote of 75/80 cents on the dollar from the morning's 64/67.

"Those who expect a haircut are sellers and those expecting a full payout are buying," said a trader explaining the volatility.

Kaisa's shares have been suspended since December.