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NEW YORK ( The Deal) -- Property developer  Sunac China Holdings has pulled its proposed HK$9.1 billion ($1.17 billion) purchase of troubled rival Kaisa Group Holdings, claiming that pre-conditions to its offer had not been met.

The decision casts further doubt over Kaisa's ability to service its $11 billion of debt, including about $2.5 billion of offshore loans that it defaulted on in April, in a first for a Chinese property developer.

Sunac said Thursday, it had dropped the acquisition because "certain conditions precedent [to the deal] have not been fulfilled." Sunac did not give details of the reasons, though the conditions included a restructuring of Kaisa's debt and the resolution of a series of legal claims against Kaisa, according to Sunac's statement when it made its offer on Feb. 6.

Sunac's offer has been in trouble since at least March 23, when lenders rejected a restructuring linked to the Sunac bid. The acquisition was thrown into further doubt in April when Kaisa's chairman and largest shareholder, Kwok Ying Shing, reversed a short-lived decision to resign and hinted that he had changed his mind about selling to Sunac.

In May, Kwok told offshore bondholders that he might be able to improve on the restructuring deal tied to the Sunac offer, but that he would have to wait until after Sunac's proposal to buy Kaisa had expired. Negotiations with bondholders have been further hampered by delays to the publication of Kaisa's 2014 results after auditors said they needed time to verify the accounts.

Sunac said in February that an acquisition of Kaisa would enable it to establish a presence in the southern Chinese cities of Shenzhen and Guangzhou. Kaisa owns 23.55 million square meters of land across 29 Chinese cities and develops housing and commercial properties. Sunac's operations are focused on the northern cities of Beijing, Tianjin and Hangzhou, as well as its home base of Shanghai.

The would-be buyer had underpinned its planned acquisition of Kaisa with a HK$4.55 billion share purchase agreement, worth HK$1.80 per share, that secured it a 49.25% stake in the target from the Kwok family. Sunac has already made two payments on those shares, worth a total of HK$2.35 billion, and on Thursday said that it would ask for the cash to be reimbursed.

Kaisa said that it was aware that the share purchase agreement had been cancelled by Sunac and the sellers and that the "offers will not proceed."

Kaisa shares have been suspended since the end of March, when they traded at HK$1.56 per share. Sunac shares closed Thursday at HK$9.22, down HK$0.54, or 5.5%, on their Wednesday close.

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