On February 13, investors in Asia Aluminum were made an
offer. Holders of three types of company debt were offered a
princely 13.5 or 27.5 cents on the dollar (depending on their
class) to sell their notes back to the company. Unsurprisingly,
many noteholders were not keen to participate in the debt
buyback, and accused Asia Aluminum of bullying noteholders with
the threat of insolvency. "It was like a person who holds a gun
to his own head," said one lawyer at the time. "Investors had
to choose between accepting very little, and nothing at all."
Sure enough, after it was reported that fewer than a third of
senior noteholders would accept the buyback, Asia Aluminum
withdrew its offer. The company entered provisional liquidation
on March 16.
Like many PRC companies, Asia Aluminum listed in Hong Kong,
joining the main board in April 1998. As...