Sunac Dumps Kaisa

WSJ: Sunac Terminates Planned Takeover of Kaisa

Sunac China Holdings Ltd. terminated a $1.19 billion deal to acquire Kaisa Group Holdings Ltd., ending a struggle for control of a property developer that had defaulted on its loans and bond payments earlier this year.

In a filing with the Hong Kong stock exchange on Thursday, Sunac said the two companies decided not to proceed with the deal, which was struck in February. It said the transaction hinged on conditions that haven’t been fulfilled and wouldn’t likely be satisfied by a July deadline.

Sunac, a Tianjin-based home builder, had offered to buy a 49.3% stake in Kaisa, a proposal that valued Kaisa at 9.24 billion Hong Kong dollars ($1.19 billion), and said it would make an offer to buy the rest. The deal was conditional on restructuring Kaisa’s debt. Sunac has already paid Kaisa HK$2.3 billion but will get a refund, it said.

...“This is obviously a negative development for Kaisa bondholders,” said Chuanyi Zhou, a credit analyst at Lucror Analytics.

Moody’s Investors Service downgraded its outlook for Kaisa’s credit rating to negative from positive. “The termination of the share purchase agreement will weaken repayment prospects for Kaisa’s creditors, including its offshore bondholders,” said Franco Leung, a Moody’s analyst.