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.