(Bloomberg) -- Alternative investment manager Ares Management Corp. has sent a proposal in recent days to some banks to buy out a stake in a HK$10.2 billion ($1.3 billion) project loan backing luxury-property development The Corniche in Hong Kong, according to people familiar with the matter. 

In its initial proposal, Ares is offering a price of 95 cents on the dollar for the syndicated loan, said the people, asking not to be identified as the matter is private. Ares is seeking to buy a majority stake, or two-thirds of the loan, according to one of the people. 

The banks held meetings Monday to discuss the potential deal, the person added, but it could take a few months to complete. The syndicated loan will mature on Aug. 25, Bloomberg-compiled data show. Interest on the loan has been paid and it is not in default, according to the person.  

A spokesperson for Ares declined to comment.

The developers and owners of The Corniche are distressed Chinese builders Logan Group Co. and KWG Group Holdings Ltd. The companies paid a record HK$16.9 billion for the site in 2017, during China’s property boom. As the country’s economic growth has slowed, there are fewer wealthy Chinese buyers willing to shell out for apartments in The Corniche. Since 2023, the project has sold five out of the 295 units being marketed, according the the development’s website. 

Once among the largest developers in China, Logan and KWG are now facing more than $9 billion in combined offshore debt, according to Bloomberg-compiled data. Logan last month secured over 90% support from its senior noteholders for a debt restructuring plan, according to the company’s annual report. KWG — which builds high-rise apartments, office buildings and shopping malls primarily in China’s larger cites — defaulted on its dollar bonds in May last year and is still working on a debt restructuring plan with its noteholders.

Private credit lenders, including family offices, private equity firms and asset managers, in the meantime have been circling distressed property developers in Hong Kong, with a record $23.4 billion of bank loans coming due this year for the sector.

Hong Kong billionaire Li Ka-shing’s real estate arm CK Asset Holdings Ltd. was in talks with existing lenders last year for a potential majority stake in the loan, Bloomberg reported in June. The deal eventually fell apart after CK Asset asked for a steeper-than-expected discount, said one of the people familiar with the matter. 

(Updates with added details throughout)

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