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A second meeting with the main underwriter for a defaulted bond of shipbuilder Evergreen Industries Holding Group and debt investors will be held this week, claiming such allegations of failure to justify due diligence and disclosure requirements.  

Meanwhile, Evergreen’s default in May and other prominent state-owned firms have lately raised concerns against bondholders bailing out of the local governments and Beijing, which has sent investors to become frustrated against training their fire over underwriters.

A meeting notice was posted by ICBC on Friday that will be held in the coastal city of Ningbo among China’s main bond clearing houses website.

In other news, it was reported that bondholders were demanding that ICBC would take charge of the meeting, and explain their side over the recent undisclosed financial and legal problems subsidiaries at Evergreen, instead of the underwriting Ningbo branch.

As part of the anomaly in December, an Evergreen subsidiary has failed to pay back a loan worth 49.9 million yuan to China Merchants Bank, thus, Evergreen had intentionally declined to disclose the said information to bond investors publicly until March.

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Based on recent documents of the Shanghai Clearinghouse, Evergreen had several outstanding bank loans with ICBC this year.

A bondholder at Evergreen attendee on the original post-default bondholder meeting in Ningbo commented, "What was ICBC doing during all this time,"

"Were they acting in the interest of their own outstanding loans, or the interest of bondholders?"

Subsequently, bondholders were frustrated at Evergreen’s May 2015 prospectus, in which it did not mention a corruption investigation against Evergreen’s Canadian unit MagIndustries Corp earlier last year.   

MagIndustries was removed from Toronto Stock Exchange list in August.

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A spokeswoman at ICBC headquarters refrained from giving comments, while requests through fax had also no response. An employee in the legal department at ICBC Ningbo Branch Guo Mengjin, remained silent on the issue.

Will Investors Get Their Money Back?

A contact person for the meeting with bondholders Zhao Xiabo announced: "Our business has not been doing well for the past five or six years and the overall financing environment is not good."

"Those investors know that they can't get any more money from us. And there have been precedents that investors could get money from underwriters."

After investors anticipate that all corporate bonds are enthusiast in an implicit government support for more than years, defaults have significantly climbed over the past year and a half. 

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