Indebted Chinese developer Sino-Ocean Group won approval for its restructuring plan from a UK court on Monday despite objections from some creditors, potentially paving the way for it to prevail in a liquidation lawsuit in Hong Kong.
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London’s high court approved the builder’s offshore restructuring proposal, which allows the state-backed company to overhaul some US$6 billion in debt. The proposal, first unveiled in July, was opposed by an ad hoc group of creditors.
The developer, which counts state-backed China Life Insurance and Dajia Insurance among its top shareholders, wants to repay creditors by issuing US$2.2 billion in long-term bonds and a combination of new mandatory convertible notes and perpetual securities.
“I have no doubt in this case that the value split is substantially fair as regards the split between all the classes of creditors in the plan,” Justice Nicholas Thompsell wrote in the judgment. The plan may be “unduly generous” towards shareholders, but for good reason, as retaining the firm’s state-owned status “increases the value of the plan to each class of creditors beyond that which they would enjoy in any alternative plan”, he said.
Sino-Ocean’s Hong Kong shares gained 13.6 per cent to HK$0.25 as of 3pm on Tuesday.
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The company has received consent for the plan from most of its lenders but has been stuck in a deadlock with a bondholder group and also faces a Hong Kong liquidation lawsuit.