The "change" of housing enterprises

The recovery of real estate in p>215 has made many real estate enterprises see hope, and then the "golden decade" of real estate has passed, and the future development still needs change. Large-scale real estate enterprises are seeking transformation to adapt to the future economic situation and consumer demand, and Wanda is one of them. In 216, Wanda Commercial Real Estate actively lowered its real estate contract sales target, which was 4% lower than that in 215, and transformed towards "light assets". In the future, key industries and performance growth will focus on industries such as cultural tourism, finance and e-commerce. Another change is the plight of housing enterprises to survive. Many housing enterprises have difficulties in debt and operation, and how to survive is what they are thinking. Kaisa has experienced from "death" to "life", and its road map for resurrection is also displayed in a paper announcement, but creditors and shareholders will still play games.

Our reporter Zhang Xiaoling Intern reporter Zhou Zhiyu reports from Shenzhen and Guangzhou

Introduction

Kaisa is optimistic about the latest restructuring support agreement. Kaisa told 21st century business herald that the company's overseas debt restructuring is progressing smoothly, and the plan has been supported by most overseas creditors. It is generally believed that the restructuring plan proposed by the company at present is the best plan for all parties.

With the gradual revitalization of domestic assets, Kaisa is trying to speed up the process of overseas debt restructuring.

on the evening of January 1th, Kaisa (1638.HK) issued a restructuring support agreement, further revealing the progress of the restructuring, following the provision of three options to overseas creditors on December 24th last year.

according to the announcement, all consenting creditors who join the restructuring support agreement and hold the supporting bills at the agreement deadline will receive a cash consent fee ranging from .5% to 1.% of the total principal of their existing bills or existing overseas loans; And each consenting creditor promises to vote in favor of the agreement arrangement required for the reorganization with its "supporting notes".

However, this restructuring support agreement is still resisted by some foreign creditors. Some foreign creditors told 21st century business herald that the restructuring plan of Kaisa is beneficial to shareholders but not to foreign creditors, and some creditors will jointly defend their rights to ensure the interests of all foreign corporate bond investors in the future.

Game for overseas restructuring

Kaisa is trying to reduce the resistance from the restructuring process.

The restructuring support agreement requires that the creditors promise not to take any compulsory measures, and provide "reasonable support and assistance" to prevent Kaisa from any insolvency, and will not take any other actions that are inconsistent with the restructuring or delay the approval or confirmation of the restructuring.

Kaisa will pay the creditors a cash consent fee ranging from .5% to 1.% of the total principal of its existing bills or existing overseas loans, provided that the creditors join the restructuring support agreement before the agreement deadline.

The deadline for the restructuring support agreement is February 7, 216, and creditors can get .5% cash consent fee before this date. If you agree to the agreement before January 24, you can get 1.%.

This means that Kaisa tried to end the negotiation of overseas debt restructuring that has troubled it for a long time in less than a month.

However, some foreign investors did not approve of the restructuring support agreement of Kaisa. This person said that Kaisa's domestic restructuring plan has a cash restriction clause at the project level, and the coupon rate is only reduced very little, which is far lower than the 4% substantial reduction of overseas coupon rate. The company gives foreign creditors more harsh conditions than domestic creditors, which is a lack of attention and respect for foreign investors.

as one of the main foreign creditors of kaisa, Farallon, a hedge fund, once put forward a plan to fight for the interests of creditors.

On November 12th last year, Farallon issued a "preliminary non-binding proposal" to Kaisa: the investor consortium led by Farallon planned to inject 15 million US dollars into Kaisa in exchange for a 2% stake in Kaisa.

For the overseas creditors of Kaisa, Farallon's proposal seems more attractive: the maturity date of the new senior notes proposed by Farallon is not only shortened, but also the interest rate is higher.

Farallon's conditions are favorable to foreign creditors but unfavorable to Kaisa's shareholders. In Farallon's capital injection agreement, the capital injection cash will be deposited in overseas bank accounts and held as restricted cash for at least two years, and the cash will only be used to distribute interest on high-interest bills and convertible bonds. This will ensure the bond liquidity of foreign creditors.

However, Kaisa believes that the issued share capital with a pre-investment valuation of HK$ 387.5 million (US$ 5 million) is 95% lower than the company's total market value before the suspension on March 31, 215, and the maturity date of the senior notes proposed by Farallon is shortened, which is not in line with the company's forecast cash flow. This is not consistent with the goal of maximizing the value of corporate stakeholder.

on November 2th, Kaisa announced that the board of directors believed that Farallon's proposal had great uncertainty in terms of time and completion, and that the proposed reorganization could bring greater benefits to existing shareholders.

Kaisa is optimistic about the latest restructuring support agreement. Kaisa told 21st century business herald that the company's overseas debt restructuring is progressing smoothly, and the plan has been supported by most overseas creditors. It is generally believed that the restructuring plan proposed by the company at present is the best plan for all parties.

however, in the eyes of the above-mentioned foreign investors, the interests of foreign creditors have not been adequately protected. "In the past year, the mainland property market has recovered, especially in Shenzhen and other places where Kaisa is located. After the unsealing of Kaisa's projects, its situation should be better than before, but foreign creditors cannot get effective financial information." The source said that Kaisa should improve corporate governance and treat all creditors equally.

the final result of the reorganization plan depends on the final vote of creditors. Kaisa issued an announcement on December 24, 215, and it is expected to apply to the Grand Court of Cayman Islands and the High Court of Hong Kong in mid-January 216, hoping that the court will order it to hold a meeting of creditors or related creditors.

People familiar with the matter told reporters that this meeting is about voting on the restructuring plan.

housing enterprises' overseas financing dilemma

In the past year or so, Kaisa's debt restructuring, especially overseas debt restructuring, is still pending, which highlights that mainland housing enterprises have not fully considered the possibility, occurrence or corresponding arrangements after financing at home and abroad.

for domestic housing enterprises, overseas bond financing is an indispensable and important channel. According to the data of Moody's and Thomson Reuters, the overseas bond financing of mainland real estate enterprises listed in Hong Kong in the past three years has exceeded 5 billion US dollars, accounting for 56% of the total financing of domestic housing stocks. As far as Kaisa is concerned, as of June 214, its overseas debt accounted for 51% of the total debt.

considering the importance of overseas financing for domestic housing enterprises, this incident has brought certain influence on the confidence of overseas debt investors and the development of domestic housing enterprises.

Zhang Dawei, chief analyst of Zhongyuan Real Estate, said that overseas financing of domestic real estate enterprises entered a dilemma in 215.

according to the data, the total overseas financing of housing enterprises in 215 was only $24.3 billion, down 61.7% compared with $63.3 billion in 214. When converted into RMB, the overseas financing of housing enterprises plummeted by 25 billion.

according to Zhang Dawei's analysis, after a two-year peak in 213, the overseas financing of real estate enterprises began to get cold at the beginning of 215, which made it more difficult to raise funds overseas, which also prompted most overseas listed mainland real estate enterprises to turn to the mainland capital market for financing. In 215, the scale of domestic financing development increased significantly. By the end of December, more than 6 real estate enterprises, including Evergrande, Sunac, Longguang and Shimao, had successfully issued corporate bonds, with the issuance scale reaching 23 billion yuan, an increase of nearly 2 times compared with 214.

But overall, the financial pressure of housing enterprises has not been completely relieved, and domestic bond issuance cannot completely replace overseas financing. In 216, Evergrande Group launched an international sale of 8% senior notes due in 219. However, as the US dollar begins to raise interest rates, it will be more difficult for housing enterprises to raise funds overseas in the future.

On the other hand, in the past two years, due to the decline of the mainland real estate market, the huge overseas financing scale has caused the capital chain of some housing enterprises to be tense, and if it continues, it may even default.

The aforementioned overseas creditors of Kaisa said that the frequency of debt default events has increased in recent years, and it can be found from recent cases that there is a huge difference in the way the company treats domestic and overseas creditors in default events. Although overseas financing is so important for enterprises, the interests of overseas creditors are often ignored by defaulting enterprises.

(The above answer was issued on January 12, 216, and the current relevant housing purchase policy should be based on the actual situation)

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