Case Study: Investigation Of Beijing Yanjing Beer Corp,.LTD. Convertible Bonds Financing

Convertible bonds as a financial planning tool for the embedded option, have similar features of equity, debt and options. In the overseas, there are lots of successful cases to use convertible bonds to process financing, while in China, however, it is as a new means of financing, has just been understanding and applying by China's listed companies.In this paper, the general theory of the convertible bonds were systematically discussed firstly; after the basic analysis of its essential elements, strength and weakness, the valuation method of convertible bonds have been researched and discussed deeply. Then, the paper expounds the"Yanjing bonds"which are released by Yanjing Beer as a case study; the issuance of convertible corporate bonds Yanjing Beer has became the appropriate financing options after Yanjing Beer analyzed its business competitive environment. Based on the financial vector analysis of Yanjing bonds, the issue presents the characteristics of stock; subsequently analyzing the cost of capital and theoretical price of of Yanjing bonds Furthermore,the effect of the issuance of convertible bonds have been studied comprehensively.The strategic decision of Yanjing Beer to select to issue convertible bonds, due to the use of exogenous capital, reducing the cost, so, financial leverage has played a role to get a lot of revenue, Yanjing Beer has gained a successful financing.