An employee works at the factory of Dongbei Special Steel Group in May.Photo: CFP

Some bondholders of Dongbei Special Steel Group, a troubled State-owned enterprise based in Northeast China's Liaoning Province that has repeatedly defaulted on its debt, are demanding that the company enter bankruptcy proceedings and pursue liquidation, the National Business Daily reported Thursday.

The development took place during a 2-day investor meeting that began Wednesday. Participants in the meeting were the holders of three bond issues on which Dongbei has defaulted.

These investors included financial institutions such as banks, funds and brokers, as well as individuals, domestic news portal qq.com reported on Thursday.

The steelmaker's new chairman, Dong Shi, spent an hour at the meeting and proposed a debt-for-equity swap.

He explained that the company can only afford to repay 30 percent of its debt within the next three years, so it's seeking to convert the remainder to equity, the National Business Daily reported, citing an unidentified investor. 

The company also said during the meeting that Liaoning authorities have submitted the swap plan to the central government, the report noted. 

However, bondholders showed strong opposition to the plan during the meeting and blamed the steel plant for not doing enough to resolve its problems, qq.com reported.

"Every time we ask, the company says it will come up with a solution soon. After several months, it proposes a swap … but how can a financial institution take losses for three years?"an investor told qq.com.

The report quoted another investor as saying that the company didn't even give any pricing information about the swap plan or describe how banks will participate.

The company's largest shareholder, the State-owned Assets Supervision and Administration Commission of the Liaoning Provincial Government, has been absent from all three investor meetings since March, said the report.

Given these issues, some bondholders are demanding that Dongbei Special Steel declare bankruptcy. But they're unsure just how much they'll receive if the company is liquidated, the report said.

To protect the interests of investors, some financial institutions that have bought the bonds, such as HuaAn Funds, have already used their own capital to repay the debt or plan to do so, qq.com reported.

Dongbei Special Steel has been involved in seven defaults on debt of 4.8 billion yuan ($718 billion) since March.