According to Oman News Agency, Onyx has offered to buy all B notes from bondholders at 35 cents on the dollar for $143m of outstanding bonds issued by Blue City.
The total value of Onyx’s offer to Class B bondholders will be $50m, it said, refuting media claims in the UK that the total value could be as much as $20bn.
An hour from Oman’s capital of Muscat, the $15bn Blue City project was touted as Oman’s biggest real estate project.
It stalled amid dismal sales and clashes between shareholders.
Blue City was to include more than 200 villas, four hotels and two golf courses.
The project missed targets as real estate investors left Middle East markets amid the global financial crisis.
A total of $925m was raised from bondholders to finance construction, which started in 2006.
Onyx said in March last year that it had bought all of Abu Dhabi-backed firm Essdar Capital’s bond investments in the troubled project for an undisclosed amount.