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Bowing to pressure from creditors and to avert liquidation, China Aviation Oil (CAO) Corp (Singapore) has revised its debt-restructuring plan to pay off its debts more quickly.
The Singapore-listed company, which is seeking bankruptcy protection after losing US$550 million in speculative trading last year, offered creditors debt repayment of US$275 million, CAO said in a statement Thursday.
This increased the repayment rate to 54 percent from the 41.5 per cent its previous bail-out plan offered.
CAO is offering US$85 million in cash and another US$145 million over five years, cutting the repayment period from eight years in the previous plan.
Creditors can also opt to have an immediate cash settlement of 45 cents for every dollar owed.
The new proposal is set to increase the chances of survival for the once-dominant Chinese jet fuel importer.
CAO has to win votes from half its 100 creditors in June to support its bail-out plan, or it will be wiped out.
Many creditors objected to the original plan CAO offered in January. The old plan proposed to write off 58.5 percent of the outstanding debt of US$530 million.
Unsatisfied with the previous debt-restructuring plan, SK Energy, which is owed US$14.3 million, is seeking to place CAO under judicial management. SK Energy's petition will be heard by a Singapore court on May 26.
"We urge creditors to vote for the Final Scheme, which offers a significantly higher recovery value than the Initial Scheme as well as other additional benefits," said Gu Yanfei, who was appointed by the CAO's board to lead the restructuring.
CAO's statement said the company is working with its mainland-based parent, China Aviation Oil Holding, and the Singapore state investment agency, Temasek, to inject cash into the company's restructuring. The negotiations are expected to conclude in July, the statement said.
(China Daily May 13, 2005)
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