A UK court will hear Sino-Ocean Holdings’ offshore debt restructuring proposal on 13 January 2025 to decide whether to approve the Hong Kong-listed Chinese developer’s restructuring plan for USD 5.64bn of debt, according to two persons briefed by attendees of an 18 October court hearing.
The judge at the High Court of Justice (Chancery Division) in England and Wales expects the “sanction hearing” to last three days as the restructuring plan has several points for examination and debate, the first person said.
As reported, the court on 18 October ordered meetings for creditors to be held on 22 November to vote on Sino-Ocean’s offshore debt revamp plan under a restructuring process under English law.
One of the conditions to be met for the court to consider approving the proposal is that it must be backed by at least one of the creditor groups representing more than 75% of the amount of the debt, the second person said. Other factors include fairness of the restructuring terms, whether there are potentially better terms, and whether opposing creditors hold a valid argument, the second person added.
A lawyer representing an ad hoc group (AHG) of bondholders opposed the restructuring plan at the hearing, citing insufficient shareholder support and lack of transparency in how the restructuring terms were set, according to the second person.
The judge noted that Sino-Ocean’s restructuring proposal retains more than 50% of existing shareholders' equity, which is higher than in other restructuring cases, hence the court would need to examine whether shareholders’ large share may crowd out creditors’ benefits, the second person said, adding that the judge also asked Sino-Ocean to open its database for drafting the restructuring plan to creditors to ensure transparency.
The AHG’s lawyer also highlighted bondholders’ concerns over jurisdictional fairness as Sino-Ocean proposes to use the Class A debt, which covers bank loans and is solely governed by Hong Kong law, to compromise dissenting bondholders, whose debts are classified as Class B, C, and D and governed by English law, the second person said.
“Sino-Ocean must ensure that information is open and transparent and introduce an improvement plan before it has a chance of finally passing the restructuring plan, otherwise the group will continue to oppose it with all its might in order to defend the legitimate rights and interests of creditors,” an AHG representative told REDD Monday (21 October).
The lawyer representing Sino-Ocean argued that creditors' rights wouldn’t be impaired by the restructuring because each group of creditors would receive a much higher recovery rate than in the event of a liquidation, according to the first person.
Sino-Ocean has announced that more than 75% of Class A bank loan creditors have approved the proposal, as reported. However, the approval rate for Class B, C, and D bondholders is still lower than 20%, according to the two persons.
Sino-Ocean has pushed back the base consent fee deadline for the offshore restructuring for the third time, delaying it to 1 November from 18 October, as also reported.
Sino-Ocean Land Treasure Finance IV’s USD 400m 3.25% bond due 5 May 2026 was indicated at 7.18 bid Monday, according to ICE Data Services.