Case Analysis Of Chinalco Marketization Debt-to-equity Conversion

Debt-to-equity swaps are generally used to reduce the bank's non-performing loan ratio and corporate asset-liability ratio.China has launched a large-scale debt-to-equity swap in the late 1990 s.At present,China is in the “three-phase superposition” period.In 2016,the State Council issued the “Guiding Opinions on Converting Equity of Marketized Banks”(hereinafter referred to as “Guiding Opinions”),marking the beginning of a new round of debt-to-equity swaps.Debt-to-equity swaps emphasize the principle of marketization and legalization,aiming at alleviating corporate burdens and improving corporate governance structure,and helping China's industrial economy to transform and upgrade.This paper first summarizes the relevant research results of debt-to-equity swaps at home and abroad,and then reviews them.Then it explains the operation mechanism of debt-to-equity swap,summarizes different forms of debt-to-equity swaps,and introduces the theory and performance evaluation methods of debt-to-equity swaps.Case company China Aluminum Corporation(hereinafter referred to as “China Aluminum”)is a leading enterprise in the domestic non-ferrous metal industry and a central enterprise directly managed by the State-owned Assets Supervision and Administration Commission.It has a strategic position in the field of mining,smelting and trading of non-ferrous metals in China.The debt ratio of the company has been rising since 2010,and the highest is close to 80%.The financial pressure of enterprises is huge.In order to help enterprises get out of trouble,Chinalco started the debt-toequity swap process in early 2017.This paper has conducted a detailed investigation and introduction of the motivations,obstacles and steps of China Aluminum's debt-toequity swap since 2017,especially the market-oriented innovative equity conversion method.This paper selects three evaluation angles to analyze the performance of Chinalco's debt-to-equity swap,which is the event research method,financial index method and other indicators.The analysis found that China Aluminum's debt-to-equity swaps have not been recognized by the market.It is reflected in the fact that China A-shares' Ashares have a negative excess return rate and a large loss after the debt-to-equity swap.However,this debt-to-equity swap effectively solved the situation that the company's debt was too high,and the corporate debt repayment index improved significantly.From this perspective,the debt-to-equity swap was initially effective.From the perspective of long-term performance,this debt-to-equity swap has not yet had a significant impact on relevant indicators,and further research is needed.This debt-to-equity swap is summarized.From the current stage,this is a smooth debt-to-equity swap.It has some obvious market characteristics and has reached the goal of reducing the debt ratio of enterprises,but its long-term performance is still uncertain.Sex.At the end of the article,the company,the implementing agencies and the government have given suggestions on three aspects from three perspectives,in order to bring some enlightenment and reference to the debt-to-equity swap of similar large-scale enterprise groups,and help this round of market-oriented debts.More projects in the conversion have been successfully implemented.