Sino-Ocean bondholders submit counter restructuring proposal to London court
Corrects paragraph 6 to show source said proposal aims to prevent holdings of all existing shareholders, not just China Life's, from rising significantly above 50%
By Clare Jim
HONG KONG, Dec 12 (Reuters) -The ad hoc bondholder group of state-backed Sino-Ocean Group has submitted an alternative offshore debt restructuring proposal to a London court in an intensifying battle between creditors and the company, according to a source and documents seen by Reuters.
The group, which holds more than 25% of the Chinese property developer's offshore notes, has been strongly opposing the company's proposal since its announcement in July contending that it divides creditors into four classes and gives preferential treatment to major shareholder state-owned China Life 610628.SS, which is also holding some of the company debt.
Sino-Ocean 3377.HK has started a parallel scheme process in Hong Kong and the UK to pass a plan to restructure its $5.64 billion offshore debt. The move, aiming to bring together all the debt governed by different jurisdictions, is a rare tactic.
Many developers have defaulted on their offshore debt since the property sector plunged into a debt crisis in mid-2021, and most are yet to complete a restructuring.
The alternative proposal, which is based on the same amount of new notes, perpetual securities and mandatory convertible bonds proposed by the company, sets a fixed conversion price for the mandatory convertible bonds in each classes, changing from a minimum conversion price.
The proposal aims to prevent the holding of existing shareholders - including China Life which holds around 30% now - from rising significantly above 50% after the restructuring when the company's stock price gains in the future, said the person who attended a call with wider bondholders on Thursday that was hosted by Linklaters, the legal advisor of the ad hoc group.
Reuters was also able to confirm the proposal from documents presented on the call.
Linklaters and Sino-Ocean did not immediately respond to requests for comment.
Under the group's proposal that aims to raise the debt recovery of all creditors, creditors would hold 95% of company shares after the restructuring, compared to a 49.3% maximum shareholding under the company's plan.
The alternative proposal also adds a rights issue option for the major shareholder, meaning it will have to make a contribution if it intends to keep a large shareholding.
The ad hoc group urged other bondholders to support the alternative proposal, saying that when China Life's votes are discounted, Sino Ocean's proposal has failed to get enough support from creditors except in Class A.
Class A represents the bank lenders and Class B, C and D cover senior note and perpetual bond holders.
Sino-Ocean is facing a winding-up petition in Hong Kong, filed by The Bank of New York Mellon BK.N, the bond trustee of the ad hoc group.
Reporting by Clare Jim; Editing by Shri Navaratnam
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
