HONG KONG, Aug 7 (Reuters) - Chinese property developer Yuzhou Group rolled out a plan to restructure its debt after defaulting on dollar bond payments last year, sparking a short rally in its shares and bonds on Monday.

The debt proposal by the Shenzhen-headquartered company, with $6.8 billion in offshore liabilities, is one of a handful announced so far by developers hit by the property sector's debt crisis.

Offshore bondholders were given three options to convert their existing debt into new notes, with the shortest tenor notes having a 70% haircut.

In a stock exchange filing on Sunday evening, Yuzhou said holders of its senior notes and senior perceptual bonds can choose between new notes with a short-term maturity, new notes with medium-term maturities together with new shares of the company, and new notes with long-term maturity.

For short-term notes that have a three-year tenor and carry 6% coupon, every $10 of principal would be converted into $3 of new note for senior note holders.

The 4%-5.5% four- to seven-years medium-term notes would have a conversion of $10 of principal to $7 of new notes and $3 of new shares, while 10-year long-term notes have a one-to-one conversion rate but carry zero coupon.

There are also some credit enhancement packages offered to the short-term and medium-term notes.

Bondholders would receive a 0.2% of early bird consent fee and 0.1% consent fee if they support the restructuring proposal.

Yuzhou's January 2023 dollar bonds traded at 4.878 cents on the dollar on Monday, compared with 4.295 cents on Friday. Its 5.375% perpetual bond traded at 3.327 cents. The company's shares soared as much as 11.8% on news of the preliminary debt proposal before declining 2.6% by noon. The shares have lost two-thirds of its value since December.

Yuzhou added the total cash available to service offshore debts is estimated to be between $3.8 billion to $4.6 billion, of which 15-19% are available before 2026.

Alvarez & Marsal, BOCI Asia and Haitong International are Yuzhou's financial advisers, and Linklaters is its legal adviser.

PJT Partners and Kirkland & Ellis are advisers of the ad hoc group, which represents holders of 29% of outstanding senior note principals. (Reporting by Clare Jim; Editing by Jacqueline Wong)