Kangda International Environmental (HKG:6136) became the subject of a mandatory takeover offer after a bondholder exchanged their holdings for shares in the company, according to a Hong Kong bourse filing Monday.

Shares of the water infrastructure builder rose 25% in morning trade Tuesday.

The company issued 546,728,004 shares after Duan Chuan Liang exchanged their bonds for stocks at a price of HK$0.25 apiece. The shares represent 25.55% of the company's issued share capital.

Following the exchange, Duan and Sharp Profit, a substantial shareholder of the company presumed to be acting in concert with the former bondholder, became interested in 1,155,718,004 shares of the business, representing 54.01% of its issued share capital.

The company said it had received an offer of HK$0.348 in cash for every stock the parties do not already own. The company also has 213,973,500 options in circulation and holders will receive HK$0.048 in cash if they accept the proposal.

Kangda International set up an independent committee to review the proposal.