Chaori Solar Bondholders to Meet Next Month After First Default

Bondholders of Shanghai Chaori Solar Energy Science & Technology Co. will meet next month as they seek repayment from the first Chinese company to default on onshore notes.

Creditors should file their claims before Aug. 11 and the meeting will be held on Aug. 18, according to a statement to the Shenzhen stock exchange today. The development comes after Shanghai marked a milestone in corporate bankruptcy last month when a court accepted a restructuring application for the solar panel maker.

Speculation is mounting that China may face more defaults as the nation’s companies have the most debt globally after increasing borrowings to $14.2 trillion as of Dec. 31, surpassing the U.S.’s $13.1 trillion, Standard & Poor’s said in a June 15 report. A meeting of Chaori’s bondholders set for March was delayed after the bond underwriter couldn’t find enough noteholders to attend for resolutions to be effective.

“Whether Chaori bondholders can get back their money still depends on the court ruling on the company’s restructuring,” said Li Ning, a bond analyst in Shanghai at Haitong Securities Co., the nation’s second-biggest brokerage. “Because most bondholders are retail investors, it’s uncertain if there will be enough registry of investors so that the meeting can be held on the planned date.”

Chaori paid 4 million yuan ($645,000) of an 89.8 million yuan coupon due March 7 on its 2017 bonds. As of March, Chaori’s liabilities were more than 700 million yuan greater than its assets, according to the Shanghai court statement last month. The Shanghai No. 1 Intermediate People’s Court accepted the restructuring application from Chaori’s supplier, Shanghai Yihua Metal Materials Ltd., because the solar maker can’t repay overdue debt, according to a statement posted on the court’s website on June 27.

The bondholder meeting will be held at 2:30 p.m. on Aug. 18 in Shanghai, according to the statement today, which was from administrators of Chaori. The Shanghai court appointed local branches of law firm King & Wood Mallesons and accounting firm KPMG Huazhen as the administrators, the statement said.

To contact Bloomberg News staff for this story: Judy Chen in Shanghai at xchen45@bloomberg.net

To contact the editors responsible for this story: Katrina Nicholas at knicholas2@bloomberg.net Andrew Monahan, Nicholas Wadhams

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