The Jhs Company Refinancing Program Design And Evaluation,

The JHS Company is a National Grade-one Enterprise and National Key Hi-Tech. Enterprise, which is the largest manufacturer of petroleum drill bit in Asia with world advanced technology. Confronted with the adverse effects of financial crisis in the last few years, the company suffers predicament of finance which shows that the company faces the situation of lacking funds to invest on everyday business and new projects and to resolve such situation, the company needs to apply for circulating capital loans from the banks and issue stocks in securities market. The research methods adopted in this paper include combinations of theory with practice, analysis of macroeconomics environment and enterprises'micro-environment, qualitative analysis and quantitative study. Based on the theoretical analysis, this paper attempts to demonstrate the object of the enterprise's refinancing and analyze the advantages and disadvantages of various approaches of refinancing and refinancing costs systematically. In the aspect of data acquisition, I obtain statistics data from existing data and authoritative documents.In the first place, I discuss the related theories of enterprise refinancing and introduce three kinds of objective selection theories including net profit maximization, per common share maximization and value maximization. Through comparing the theories and characteristics of various kinds of ways of enterprise refinancing according to three aspects—financial resource, whether through agencies or not and different property orders, we can figure out the advantages and disadvantages of various kinds of refinancing patterns.In the next place, the second part of this paper mainly introduces the basic situations, business characteristics and competitive conditions of JHS Company, analyzes the existing capital structure and financial condition of the company and focuses on analyzing the solvency and profitability of the finance situation to point out the problems the company is exposed. By evaluating several kinds of available ways of refinancing, I want to figure out appropriate refinancing patterns and put emphasis on the three refinancing proposals--convertible bonds, seasoned equity offerings and directed additional shares. The three proposals on the one hand take the present fiancésituation into consideration, and make the best use of financial leverage to refinance the needed funds for investment projects. On the other hand, they as well pay attention to the influence that the implementation of such refinancing proposals has on the control of substantial shareholders. After financial analysis and risk assessment of these refinancing proposals, we can obtain an optimal refinancing proposal.Eventually, after implementing the refinancing plan, the company would accomplish the accumulation of technology and market, strengthen the core power of competition, improve the profits, and maximize the value of the company by properly using the collected fund and balancing the equity capital and the creditor capital.