(Bloomberg) — Kaisa Group Holdings Ltd. shares dropped after the beleaguered Chinese developer said it appointed financial and legal advisers and has been in talks with bondholders on a debt restructuring plan.
The stock opened 7.6% lower on Monday morning in Hong Kong after it resumed trading following a halt on Dec. 8. That takes this year’s decline to 77%.
Kaisa hired Houlihan Lokey (China) Ltd. to evaluate the company’s liquidity and explore all feasible solutions after missing multiple offshore debt payments, the developer said in a stock exchange filing. It appointed Sidley Austin as legal adviser.
Fitch Ratings downgraded Kaisa to restricted default earlier this month, citing its failure to repay a $400 million dollar bond that matured Dec. 7. It’s the second time that Kaisa has lapsed into default in six years. Kaisa has also missed interest payments on two dollar bonds after grade periods ended, increasing pressure on the company to come up with a restructuring plan.
In its statement, Kaisa said it hasn’t received any notice regarding acceleration of repayment by holders.
The developer’s woes add to contagion risks in Chinese credit markets, which are already grappling with a looming restructuring by China Evergrande Group. Fitch has also cut Evergrande to restricted default. On Friday Shimao Group Holdings Ltd.’s credit rating was slashed to junk territory from investment grade by Fitch.
Shenzhen-based Kaisa is one of the largest issuers of dollar notes among Chinese developers, with more than $11 billion outstanding. It had become a symbol of the boom years in Chinese credit markets after emerging from a high-profile default in 2015.
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