(Bloomberg) -- Defaulted builder Sino-Ocean Group Holding Ltd. is working to garner enough support to help secure approval for its debt restructuring plan, but remains far short of the needed backing amid opposition from a key bondholder group.
The company has support from a lender group representing about half of the company’s so-called Class A debt, Sino-Ocean said in a Thursday filing with the Hong Kong stock exchange. Lenders have either entered into a restructuring support agreement or are going through internal procedures to obtain the relevant approvals to do so.
The builder still needs to get wider support from other creditors. Disagreements among creditor groups can slow the progress of debt overhuals. Such disputes can also contribute to the collapse of restructuring proposals, as was the case with China Evergrande Group last year.
Under the proposed restructuring, there are four classes of creditors and all bondholders are grouped into three of these. Sino-Ocean aims to garner the support of 75% of each of class participating in a vote on the restructuring by August, according to a person familiar with the matter.
An ad-hoc group of creditors said it is “strongly against” the proposal and called for terms to be improved. It said there is concern about a lack of transparency from Sino-Ocean and that an open call is being arranged for as soon as early next week.
The ad-hoc group holds more than 25% of the debt in at least two of the classes, which it said is enough to block the restructuring plan. The group has called for major shareholder China Life Insurance Co. to bolster support for Sino-Ocean. It is also seeking enhancements to the current restructuring plan, including increased upfront payments, it said Friday.
So far, China Life Insurance Co. has been a passive participant in the talks, the person familiar with the matter said.
Sino-Ocean sent the restructuring proposal to the ad-hoc group a month ago, the person said.
The ad-hoc group said it has also called for a reduction of the haircut that creditors are expected to take in the plan.
Sino-Ocean and China Life didn’t immediately respond to requests for comment.
Sino-Ocean suspended payments on all offshore borrowings in September 2023, one of dozens of Chinese builders to default on dollar-denominated debt as the country’s property crisis persists. The company said earlier this year that it would prioritize repaying local debt.
The builder also faces legal proceedings that could result in its liquidation. A winding-up petition was filed against it last month, and the first hearing has been set for Sept. 11. Sino-Ocean said in a separate exchange filing Thursday that its board views the effort as not representative of others stakeholders’ interests “and may impair the value of the company.”
--With assistance from Jeremy Hill.
(Updates with more details throughout)
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