Recently, there has been an uproar that Kaisa (01638) once again ushered in the "Knight in White".
Zhitong Financial APP learned that on the evening of April 5, Kaisa Group announced that it had signed strategic cooperation agreements with China Merchants Shekou and Great Wall assets to promote the transformation of Kaisa's urban renewal projects and revitalize commercial and residential project assets. to ease short-term liquidity difficulties.
Since Kaisa's storm in November last year, the repayment progress of its wealth management products with 17.7 billion principal and interest, the repayment plans of supply chain financial products, domestic bank trust loans, open market bonds, and so on, has always been a topic of greatest concern to relevant stakeholders and the public. Everyone is "patient" waiting for Kaisa to come up with a substantive plan. This strategic cooperation agreement with central state-owned enterprises and asset management companies undoubtedly makes Kaisa's creditors see the dawn of solving the debt problem.
But in fact, with the entry of Shekou and Great Wall assets, only a strategic cooperation framework has been signed between the three parties, and it is still unknown when they will land. The market is more concerned about whether the cooperation between the three parties can be substantially promoted and whether it will be delayed indefinitely because of the price game in the future.
The guarantee of property insurance wealth is still the top priority of Kaisa.
Prior to this, a number of provinces and cities issued commercial housing transaction risk tips to strengthen the supervision of pre-sale funds and prevent housing enterprises from misappropriating funds in pre-sale accounts at will, with only one ultimate goal, that is, "Baojiaolou". Kaisa is no exception. After the trap, the pre-sale funds for Kaisa's projects were also transferred to a regulatory account opened in the name of the local housing and construction department or a third-party association entrusted by the local government.
In fact, tight supervision also makes the ability of real estate enterprises to dispatch paper funds worse. According to recent reports, housing companies will be allowed to withdraw and use excess funds freely after the pre-sale funds have reached the regulatory quota, so as to improve the liquidity of housing enterprises' funds. But in the current environment, for real estate companies that urgently need to pay suppliers to restart construction and guarantee buildings, this money is likely to be a drop in the bucket.
Baojiaolou and Fortune should be at the top of Kaisa's disposal priority. In the cold winter, it is urgent to actively seek a feasible solution to the liquidity crisis. Whether it is to comply with regulatory guidance, or out of the original intention of taking care of feathers and social responsibility, for Kaisa industry at this time, only by obtaining capital "blood transfusion" as soon as possible and resuming normal operation can we tide over this difficulty smoothly and give a satisfactory answer to financial managers, property buyers and upstream and downstream enterprises.
Kaisa, whose market rivals hold high-quality assets, has higher expectations for solving the debt crisis.
As of the first half of 2021, Jiazhao holds up to 213 urban renewal projects, with an estimated sales area of 110 million square meters, most of which are located in Guangdong-Hong Kong-Macau Greater Bay Area. After the overdue financial products, Kaisa also produced a list of assets to be disposed of, and is expected to dispose of 25 projects, including 10 old projects in Shenzhen, with a conservative value estimated to exceed 100 billion. In addition to its intention to sell a large number of domestic assets to solve the debt problem, Kaisa sold some of its Hong Kong assets in November 2001, with the market speculating that it could return about $400m. Kaisa has not disclosed any information on the disposal progress of the 25 projects and the use of the proceeds from the sale of assets in Hong Kong.
Despite the topic of the recent strategic cooperation framework agreement, it has been five months since Kaisa's debt crisis marked by the formal default of US dollar debt in December last year, and Kaisa has made detailed fund-raising progress. The payment and repayment plans of wealth management products, suppliers and creditors still have not given any substantive answer to the market. Especially in the case of the delayed release of the report in 2021, the market has to further worry about whether the current situation of Kaisa and the rights and interests of various stakeholders have been improved and alleviated.
Under such circumstances, Huaxia Bank and China Minsheng Banking Corp took radical measures to set aside the advance money of property buyers to protect their rights and interests as creditors. On the other hand, Kaisa's dollar debt swap proposal to overseas creditors, the only debt solution that has disclosed details, has also failed. According to overseas media reports, compared with the extension plan put forward by other private developers in similar liquidity difficulties, Kaisa's plan does not include settlement provisions such as additional collateral, real controller credit guarantee, partial payment and so on.
Can we get out of Kaisa's characteristic self-rescue and rebirth?
At this stage, in the face of uncertainty in the real estate market, although the market demand is still very large, real estate transactions have slowed down. The reason is that, first, the real estate industry has entered a downward cycle, and there are only a handful of buyers willing to sell; second, due to the pressure of guaranteed delivery and debt reduction, sellers are often eager to sell projects to withdraw funds, which is naturally weak at the negotiating table. This situation also stimulates buyers to "wait" or "cut again" mentality.
Even if the debt-bearing acquisitions of real estate enterprises are no longer included in the "three red lines" indicators, so as to avoid the worry of touching the "red lines" for buyers who are interested in receiving mergers and acquisitions, including news that the central bank has asked nine state-owned enterprises, including Poly, to provide liquidity support to 11 real estate enterprises, including Zhongliang, by taking over M & A projects. But at a time when real estate companies generally hold on to cash flow, acquirers are also likely to use liquid funds cautiously (especially if they may be seen as hostile takeovers), which explains why the progress of 9 / 11 mergers and acquisitions is still slow.
As the concern mentioned at the beginning of the article, investment promotion Shekou, Great Wall assets and Kaisa may also be difficult to avoid back and forth in price negotiations in the future, these games will undoubtedly lengthen the "front". If Kaisa still has no choice but to transfer its assets at a price significantly lower than the fair value after many rounds of price games between the two sides, Kaisa still has no choice but to transfer its assets at a price that is significantly lower than the fair value, then the amount of capital will be far less than expected. it will also harm the interests of shareholders, creditors and other stakeholders. Considering the asset quality and past excellent performance of Kaisa, Kaisa can actually "take the initiative" under the current environment, try to solve the liquidity and market confidence crisis more actively, and restart the construction work as soon as possible. Let buyers live in the purchased property as soon as possible.
So the crux of the problem is that only when the acquisition enterprise buys Kaisa's high-quality assets at fair value, can its acquisition maximize the funds to Kaisa to solve the short-term liquidity problem, reach a positive and feasible repayment plan for financial products and US dollar debt, and have as much funds as possible to drive the construction of the project, safeguard the interests of other relevant parties in Kaisa, and truly save themselves.
The game of price is largely related to the situation in which the acquirer is subject to capital. However, it is reported that due to Kaisa's excellent asset quality, there have been investors in the market who are willing to provide $2 billion in new financial support in the form of debt financing to provide acquisition financing for prospective buyers. Financing costs are also close to the market, financing in a variety of forms, including bridge loans or long-term loans, and can tie in with the transaction schedule. In fact, this also provides a new path for Kaisa to return to "fair value".
In addition to selling assets, injecting capital into the enterprise from the root is also an option worthy of active consideration by investors and Kaisa. The share price of Kaisa Group has plummeted since the liquidity crisis, and until now it is still in a seriously clean state, and its equity value may be undervalued.
If Kaisa can find the help of powerful domestic and foreign capital providers or the favor of new state-owned shareholders at this time, on the one hand, its new funds can help solve the urgent pressure on financial products and project money. on the other hand, it will better stabilize the stock price and the confidence of the market and business partners. This is a win-win approach for Kaisa and equity investors.
Whether it is the acquisition and acquisition of out-of-danger housing enterprises by central state-owned enterprises, or the capital injection from home and abroad, it can naturally become part of Kaisa's self-rescue plan, but considering uncertain factors such as time costs, transaction costs and policy risk changes, Kaisa should actually "walk on two legs" and actively consider other market-oriented financing options at the same time, so as to realize Kaisa's self-rescue and rebirth.