Sino-Ocean wins UK court approval to move forward on debt plan

THE debt restructuring plan brought by the defaulted Chinese builder Sino-Ocean Group Holding was approved by a London judge on Monday (Feb 3), despite several bondholders challenging its terms.

The judgment came after the conclusion of a three-day hearing in which Sino-Ocean’s bondholders fought over the fate of its equity. The proposal would see the state-linked company restructure some US$5.6 billion of debt. A group of bondholders first filed a petition in June last year seeking liquidation.

“The plan may be seen as being unduly generous towards shareholders but there is a good reason for this,” said Judge Nicholas Thompsell. Sino-Ocean “has done its best to allocate fairly the value preserved or generated by the plan over and above the relevant alternative.” 

Citing tight liquidity, the state-linked company defaulted on its dollar bonds and suspended payment on all its offshore borrowings in September 2023. The developer has largely secured its loan lenders’ approval for the restructuring, but it has been locked in a months-long standoff with a key group of its offshore bondholders. 

Sino-Ocean’s dollar bonds traded at around 8 US cents on Monday, levels considered deeply distressed.

Last month, a Hong Kong court delayed a hearing on Sino-Ocean’s restructuring agreement with lenders, pending the decision in the UK case. The company argued that the London court held jurisdiction over its bonds, in one of the most prominent examples of a Chinese debtor trying to tap into UK insolvency law. BLOOMBERG