(Yicai Global) Nov. 9 -- Kaisa Group Holdings apologized for overdue repayment of wealth management products it guarantees, saying the Chinese property developer is taking measures to resolve the issue, including the sale of top-notch assets in Shenzhen and Shanghai.

A liquidity crunch had caused the problem, the Shenzhen-based company said via WeChat yesterday, adding that it was speeding up sales of real estate projects to retrieve the necessary funds. The wealth management products were issued by Jinheng Wealth Management.

Kaisa pointed out that its overall assets are greater than its debts, and it has enough high-quality assets to dispose of. The company asked investors for more time and patience in order to formulate a repayment plan as soon as possible.

A meeting of investors’ representatives scheduled for tomorrow will be cancelled, partly due to risks from the Covid-19 pandemic, Kaisa said.

International Financial News reported on Nov. 5. that Kaisa issued a principal of about CNY11.9 billion (USD1.9 billion) through Shenzhen-based Jinheng Wealth Management, with predicted interest by maturity of CNY875 million (USD136.9 million), resulting in a total sum of CNY12.8 billion. The amount overdue is about CNY300 million (USD46.9 million).

Kaisa is now negotiating with investors over the repayment plan, the report said, citing an anonymous source, adding that they had asked for a 30 percent repayment and the redemption of both principal and interest within a year. Kaisa will offer three high-quality assets -- the Dongjiaotou and Dongshan residential communities in Shenzhen and its headquarters in the city -- to guarantee redemption of the products. 

Trading of Kaisa’s shares [HKG:1638] has been suspended since Nov. 5. The firm’s problems are another sign of the cash crunch besetting China’s real estate sector, and the US Federal Reserve has warned that the situation could pose a risk to the American economy, according to a Reuters report. Fitch also downgraded Kaisa today, citing slow progress in asset disposals.

Editor: Tom Litting