BEIJING Dec 1 State-owned Dongbei Special Steel
Group Co held its first creditor meeting on Thursday
as part of a bankruptcy restructuring process aimed at
recovering a reported $10 billion in debt, official news agency
Dongbei has been at the heart of troubles in China's debt
market this year, defaulting on nine separate bonds since March
even as Beijing has vowed to crack down on "zombie" firms with
perennial losses and too much debt.
Owned by the Liaoning provincial government in the country's
"rustbelt" northeast, the group formally entered into the
bankruptcy restructuring process in October following a court
filing by a creditor and supplier.
Thursday's meeting, held by a court in the northeastern city
of Dalian, was attended by 374 creditors, Dongbei's
restructuring management team and staff representatives, asset
valuation agencies and auditors, Xinhua reported.
Creditors have reported about 70 billion yuan ($10 billion)
in total debt to the court, the report said, adding that the
amount needed to be checked and confirmed.
The court appointed a local branch of Bank of China Ltd
, the country's fourth-biggest state lender,
to chair the creditor meeting, Xinhua said.
Dongbei Special Steel has been in touch with several
potential strategic investors and started an asset valuation
process, the report said, adding that several central
government-owned enterprises and listed companies have expressed
interest in investing in the group.
Dongbei's first bond default in late March helped trigger a
sharp sell-off in corporate debt markets as investors reassessed
the likelihood of bailouts for key provincial government-owned
enterprises, especially in the coal and steel sectors hobbled by
Over-capacity and slowing demand led to a slump in prices
that devastated the steel sector last year, saddling many
Chinese mills with losses and adding to their debt burden.
China has sought to improve the sector's fortunes by
ordering the closure of up to 150 million tonnes of capacity
over 2016 to 2020, helping a recovery in prices.
Dongbei's extended struggle with creditors over how to
restructure its debt has highlighted the inefficient process of
debt restructuring at Chinese state-owned firms.
The group's chairman, Yang Hua, was found dead in March in
an apparent suicide.
Dongbei Special Steel's two subsidiaries, Dalian Special
Steel Co and Dalian High Alloy Bar and Wire Rod Co, will hold
their first creditor meetings on Thursday afternoon and Friday
morning respectively, Xinhua reported.
($1 = 6.8949 Chinese yuan renminbi)
(Reporting By Shu Zhang in BEIJING and David Stanway in
SHANGHAI; Editing by Richard Pullin)