China developer Sino-Ocean announces $7.6 billion offshore debt revamp plan
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Its debt revamp plan is the latest in the China property sector that has seen dozens of major developers slipped into defaults.
PHOTO: AFP
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Hong Kong - State-backed Sino-Ocean Group has reached an agreement with some of its creditors to restructure its US$5.64 billion (S$7.6 billion) offshore debt, the Chinese real estate developer said on July 18.
The debt revamp plan is the latest in the China property sector that has seen dozens of major developers slip into default since 2021. Most of those defaulted are privately owned companies, and only fewer than a handful are state-affiliated.
Beijing-based Sino-Ocean said it will repay the existing debt with new loans and notes worth US$2.2 billion, convertible bonds or interest-bearing perpetual securities, according to the proposal filed to the Hong Kong bourse. The new debts will have maturities between three and 10 years.
The developer said a major bank group representing half of the Class A debt has agreed to the restructuring plan.
Creditors of Sino-Ocean are grouped into four classes, with Class A comprising more than US$2.2 billion worth of syndicated and bilateral lenders, and the rest senior note holders. Each class will be allocated different ratios of new debts.
As a credit enhancement package to the new debts, the company will provide all of its offshore assets and some of its onshore assets, said a person familiar with the proposal.
The package includes shares in listed-unit Sino-Ocean Service Holding, other receivables and residential projects, with total values covering at least 50 per cent of the US$2.2 billion new debts, the person added.
Certain bond holders will receive 0.1 per cent early bird consent fee and 0.05 per cent consent fee if they support the restructuring proposal by Aug 8 and Aug 22, respectively, according to the company.
Shares of Sino-Ocean firmed 4 per cent on the morning of July 19, versus a 4 per cent fall in the Hang Seng Mainland Properties Index.
Sino-Ocean’s problems are part of the debt crisis that has beset China’s beleaguered property sector. The company started the process of restructuring its offshore debt in the second half of 2023.
In June, Sino-Ocean said it had received a winding-up petition filed against the company by Bank of New York Mellon in a Hong Kong court. The first hearing of the case has been scheduled for Sept 11.
The major bank group, which has agreed to the restructuring proposal, is expected to join the company in opposing the petition, said the person familiar with the restructuring proposal.
Negotiations with a separate major bond holders’ group are ongoing, with the latter still pushing back some terms in the latest proposal, added the person. REUTERS
