China South City (HKG:1668) said it offered its offshore bondholders the option to take a debt haircut and exchange the reduction for shares in the company, according to a Hong Kong bourse filing Thursday.

Under the proposal, holders of the company's U.S.-denominated senior notes would exchange 40% of their principal plus accrued but unpaid interest for equity on the basis of HK$0.75 and HK$1.50 per share, respectively.

The remaining 60% of the debt would be exchanged for new notes that would last eight years after the company's restructuring effective date and accrue interest at a rate of 2% per annum.

Meanwhile, other offshore liabilities will be extinguished in full. In return, the company would exchange half of the amounts previously borrowed, plus accrued but unpaid interest, for equity on the same terms as the U.S.-denominated senior notes.

Similarly, the other half of the debt will be exchanged for new notes that would last eight years after the company's restructuring effective date and accrue interest at a rate of 2% per annum.

Elsewhere, the company said it would settle its previously announced dividend of HK$0.02 per share for new shares of the company on the basis of HK$1.50 per share.

As part of the plan, the company said any proceeds from the disposal of its onshore projects would be paid into a designated bank account for the repayment of offshore debt.

The firm said if it receives court approval for its restructuring proposal, its liquidators plan to apply for a permanent stay of a previously issued winding-up order.

China South City was ordered to wind up by a Hong Kong court last year over an alleged non-payment of about $306.2 million. The petition was filed by Citicorp International over previously issued debt by the company.

The firm said it would solicit feedback from creditors on its proposals before taking any further steps.