A Case Study On Market-Oriented Debt-to-Equity Swap Of Shandong Energy Group

With the slowdown of macroeconomic growth,China has entered the economic cycle of economic restructuring and industrial restructuring.Many real enterprises are trapped in operational difficulties.Facing high leverage ratio and serious debt burden,they are now facing debt repayment difficulties or debt default.Based on this situation and draw lessons from the successful experience of the last round of debt convertible,the state council issued a series of related policies to guide and encourage enterprises with the development of good prospects and temporary difficulties to take market-oriented debts into shares.Then the enterprises can reduce the rate of assets and liabilities of enterprises and Banks non-performing loan ratio,guard against financial risks,improve the economic and financial asset quality and degree of quality and safety operation.This paper selects the debt relationship between shandong energy group and China construction bank as a case study of market-oriented debt-to-equity swap.Firstly,this paper sorts out the domestic literature on foreign debt equity swap and analyzes the relevant theoretical content of debt equity swap.On this basis,the market-oriented debt-for-equity swap is compared with the government-oriented debt-for-equity swap,convertible bonds and asset securities,highlighting the characteristics of this round of debt-for-equity swap.In addition,the current situation of debt-for-equity swap in China is introduced.And it is pointed out that the implementing agencies attach great importance to this swap,due to the heavy task.Then this paper selects the first case of debt-to-equity swap between shandong energy group and China construction bank in the coal industry,introduces the specific situation of shandong energy group in detail,and emphatically analyzes the implementation motivation and operation plan of this case.Then it deeply discusses the characteristics of the debt-to-equity swap case of shandong energy group and its influence on both sides.The study finds that,from the perspective of enterprises,debt-for-equity swap brings good promotion effect to shandong energy group's operation.From the perspective of Banks,debt-for-equity swap reduces the non-performing loan ratio of Banks.At the same time,the successful implementation of the market-oriented debt-for-equity swap between China construction bank and shandong energy group has also played a good demonstration role in the society.Although the debt-for-equity project can be carried out smoothly,there also have many problems,such as the slow implementation of capital,the project has some extra costs and the equity withdrawal may be difficult.Finally,this paper points out that,although in this case the success of the debt stock marketability advancement has brought positive effect,the companies can't turn all hope on debt-for-equity swap.It can reduce leverage and achieve the healthy development of the auxiliary device.Only the enterprises enhance the rationality of structure of assets and liabilities and improve the management level,can we truly achieve smooth transition.At the same time,the government should further improve and perfect relevant laws and regulations,give full play to the role of the market,ensure the efficiency of debt-for-equity swap,and guide Banks and implementing institutions to supervise and manage enterprises,so as to achieve the goal of supply-side reform smoothly.