International Financial Law Review named Kaisa’s offering and concurrent exchange and tender offer, a deal on which Sidley advised, as its “Deal of the Year: High Yield” at the IFLR Asia-Pacific Awards 2022. The annual awards celebrate the region’s most legally innovative cross-border work of the year and the teams and individuals behind it.
Sidley assisted Kaisa Group Holdings Ltd. (Kaisa Group) in its offering of approximately US$1 billion 11.7% senior notes due 2025, including “high-yield” covenants and pursuant to Reg S, and its concurrent exchange offer and tender offer to its existing 9.375% senior notes due 2024. The new notes include US$500 million principal amount issued to new investors, and an additional US$500 million principal amount issued to holders of existing notes, pursuant to the terms of the exchange offer. The existing notes were tendered for purchase under an unmodified Dutch auction procedure, in which the Kaisa Group purchased notes for cash at approximately US$304 million.
The structure of the deal is rare. It combines a new notes offering with a concurrent exchange offer and an unmodified Dutch auction cash tender offer. This is the first time in a long period of time a high-yield issuer has attempted to complete such a transaction. Sidley, as the issuer’s counsel, advised on the structuring of the transaction, led the negotiation for the issuer, and successfully executed the transaction in a tight timeframe. The deal was completed in April 2021.
The total new notes issued as a result of the successful exchange offer led to an issuance of over US$1 billion of new notes. The tender offer also enabled Kaisa Group to retire its existing debt at favourable pricing. The exchange offer and tender offer both have helped Kaisa Group to alleviate its refinancing burden in the following year and extended its debt maturity profile.
The Sidley team was led by partner Renee Xiong, with the support of counsel Dominic Sze, and associates Anne Cai and Angie Fan.