HONG KONG bondholders seem to have changed their minds about who to blame for the fall in the value of their HKR International convertible bonds (CBs). The CBs have lost lustre in bondholders' eyes as a result of HKR International's plan to issue a $2.4 billion special dividend of bonds and warrants to holders of its shares. The value of the CBs plummeted by almost 30 per cent as the market priced in the windfall to shareholders. As a result, CB-holders will probably scramble to convert their bonds into shares so they can benefit from HKR's largesse, suddenly creating about 39 million new shares and forcing down HKR's share price in the process. One investment bank has already downgraded it two notches and says there will be a management discount factor on HKR as a result of the dispute with bondholders. Last week at least one big investor in the bonds warned that HKR's name would be besmirched by the move and even threatened possible legal action. Some bondholders said they had not been informed by HKR of the move. But HKR insisted last week that it had discharged its legal and fiduciary duty to bondholders. Now bondholders are complaining about the performance of the trustee, First Trust of New York, which they reportedly say did not even contact them about the special dividend. Holders of the CBs have until the end of the week to convert into shares and take part in the special dividend. But after some strong criticism of HKR, it would be nice to get some answers from the bondholders. Are they considering legal action against HKR? Are they accusing it of a breach of its fiduciary duty? Are they considering action against the trustee, First Trust of New York? Monday's extraordinary meeting should provide an opportunity for the bondholders to provide answers. And then maybe everyone can get some peace.