China's Sino-Ocean proposes $4 billion convertible bonds in offshore debt revamp

By Clare Jim and Sneha Kumar

(Reuters) -Chinese property developer Sino-Ocean Group said on Tuesday it planned to issue a total of $4.02 billion of mandatory convertible bonds and perpetual securities as part of its offshore debt restructuring proposal.

The issuance of the perpetual securities and two-year mandatory convertible bonds, along with new debt worth $2.2 billion, forms part of the state-backed developer's plan to restructure its $5.64 billion offshore debt.

Sino-Ocean was one of the Chinese property firms that defaulted on offshore bonds after the country's property sector collapsed in mid-2021.

The Beijing-based developer received a winding-up petition in late June filed by The Bank of New York Mellon in a Hong Kong court.

Sino-Ocean's offshore debt restructuring plan, first announced in July and subject to creditors and courts' approval, is facing strong opposition from a key bondholder group as it divides creditors into four classes and repays them differently.

The group, which holds more than 25% of the developer's offshore notes, urged other bondholders in a call on Monday to vote against the restructuring proposal. It said the proposal treats them unfairly compared with the company's major shareholder, state-owned China Life Insurance, according to the call minutes seen by Reuters.

The bondholder group said it is preparing a counter-proposal that aims to raise their debt recovery rate, without giving more details.

The group challenged the restructuring proposal at the convening hearing in a court in England earlier this month, citing a supporting rate of less than 20% in three of the creditor classes, a person with direct knowledge of the matter said.

Sino-Ocean did not immediately respond to a request for comment.

In a separate filing on Tuesday, the developer said the outstanding amount of its $200 million credit-enhanced green notes due 2025, which is not included in the offshore debt restructuring, was redeemed in full on Monday.

(Reporting by Sneha Kumar and Clare Jim; Editing by Rashmi Aich, Subhranshu Sahu and Hugh Lawson)