Sino-Ocean Group has yet to receive the needed unanimous consent from banks in three offshore syndicated facilities to roll over for nine months the 19 September installments already deferred from June, said two sources familiar with the matter.

In a meeting the banks held early last week with the China Life Insurance Co- and Dajia Life Insurance-backed developer, some said they were unwilling to roll, which prompted some of the other previously supportive lenders to dither, said the two sources.

The banks that said they are unwilling to roll attributed their reluctance partly to Sino-Ocean’s failure to perfect the share pledges that are supposed to be added to back the three loans as part of the rollover, said one of the two sources.

The objecting lenders are foreign banks, said the second source familiar.

Some lenders remain committed to the extension, said both sources.

As Debtwire reported on 20 June, the banks in the three loans unanimously agreed to defer to 19 September the final payment on an originally USD 800m-equivalent facility due-21 June loan as well as a June amortization each on syndicated loans due-June 2024 and due-June 2025.

The initial three-month extension was meant to provide Sino-Ocean Group with a window to finalize the further nine-month roll over of the payments – effectively to defer them by 12 months, as reported.

In exchange for the extensions, Sino-Ocean offered to provide security over its shares in the nine offshore units through which it indirectly holds all its projects, as reported.

Debtwire Par data shows that there is HKD 3.8465bn (USD 490m) and USD 70m remaining on the originally USD 800m-equivalent facility due 21 June and that Chinese banks were allocated 69.2% of the loan.

The other two loans comprise a USD 753.97m-equivalent due-June 2024 loan and a USD 712.93m-equivalent due-June 2025 loan. The sources didn’t detail how much is left on those.

Sino-Ocean also has an outstanding USD 200m club loan that closed in June 2022, for which this month’s initial amortization is also supposed to be included in the nine-month roll, as reported. The sources didn’t know the status of that extension effort.

The original lenders of the three syndicated facilities include in part HSBC, Hang Seng Bank, United Overseas Bank, Bank of China (Hong Kong), Agricultural Bank of China Hong Kong Branch and Industrial and Commercial Bank of China (Asia), as per Par data.

Sino-Ocean Group declined to comment.

Bond delays

Sino-Ocean only resumed talks with offshore lenders over the nine-month refinancing after it finally on 31 August obtained consent for a one-year term out for its CNY 2bn 4% corporate bonds due 2 August, said the first source familiar.

The developer is also struggling to pay coupons on its USD bonds. Sino-Ocean completed on 18 August a consent solicitation to defer each of its next three USD bond coupon payments for two months as well as waiving any default arising from the consent solicitations.  The three coupons were originally meant to be paid on 30 July, 4 August and 5 August.

China Life Insurance Co has fully written off its 29.59% stake in the developer, the state-owned insurer’s interim report released 23 August showed. The original investment value was CNY 11.245bn, as per the report.

Moody’s on 28 July cited expected weakened support from China Life to Sino-Ocean as a reason for downgrading the developer’s corporate family rating by one notch, to Caa2.

Chinese news outlet 36Kr reported on 1 June that Sino-Ocean Group’s two largest shareholders, China Life and Dajia Life, have established at the developer's headquarters a joint working group with Sino-Ocean's auditor, BDO Limited, to investigate the liquidity risk and assist in refinancing upcoming debt maturities.

Bloomberg reported on 3 July that the working group led by state-owned shareholders has engaged an adviser to conduct due diligence. 

Sino-Ocean Group (China) issued a 6 July statement confirming that the two life insurers had formed a joint working group to "have a more comprehensive understanding of Sino-Ocean's business operation". It also said in the statement that the working group had hired a financial advisor to "provide services" for the working group, without naming the advisor.