Cash Buyback, Asset-for-Debt Swap: Sino-Ocean Follows Mainstream Debt Restructuring Models of Property Firms

On the evening of August 1, Sino-Ocean Group announced a preliminary plan for the restructuring of its onshore bonds, involving seven corporate bonds—including "H18 Sino-Ocean 1," "H15 Sino-Ocean 5," and "H15 Sino-Ocean 3"—as well as interbank private placement debt financing instruments. The restructuring options include cash buyback, stock economic benefits, asset-for-debt swap, and general bond extensions.

Under the cash buyback option, the relevant parties plan to repurchase target bonds with outstanding principal not exceeding RMB 4 billion at 20% of their remaining face value, using no more than RMB 800 million in cash.

The second option involves stock economic benefits, under which Sino-Ocean intends to issue up to 2.8 billion ordinary shares to a special purpose trust in Hong Kong, China, using the net cash proceeds from the stock sale to repay part of the target bonds. The conversion price is approximately five times the average stock price over the 20 trading days prior to the filing date, adjusted for exchange rates.

The third option is an asset-for-debt swap, divided into two types: residential project income-for-debt and commercial project income-for-debt.

For the residential project income-for-debt option, the relevant parties plan to use service trusts or similar mechanisms to repay RMB 30 for every RMB 100 of remaining bond face value, with total principal repayment not exceeding RMB 3 billion. The underlying credit enhancement assets consist of income rights from residential projects in the Beijing-Tianjin-Hebei region and the Greater Bay Area, with a trust duration of no more than four years.

For the commercial project income-for-debt option, the plan is to use service trusts or similar mechanisms to repay bonds with total principal not exceeding RMB 4 billion at a ratio of RMB 100 in trust shares for every RMB 100 of remaining bond face value. The underlying credit enhancement assets are income rights from commercial projects in Beijing, with a trust duration of no more than nine years.