Case Study Of Market-oriented Debt-to-equity Swaps In China Aluminum Corporation

As China's economy enters a new normal,economic growth shifts,industrial transformation and upgrading,the real economy is under greater pressure,some enterprises have difficulties in operating,their ability to repay loans has weakened,debt defaults have occurred frequently,and banks' balance sheets have become increasingly "ugly".Market-oriented debt-to-equity swaps have become an important issue for governments,banks,enterprises and academia to reduce the leverage ratio of Chinese enterprises,reduce the non-performing loan ratio of banks,and resolve financial systemic risks.This round of debt-to-equity swaps is based on marketization and rule of law,giving full play to the decisive role of the market.While reducing the company's asset-liability ratio and reducing the exposure of the banking system,it strives to promote the internal governance structure reform and improve the efficiency of business operations.This paper selects the market-oriented debt-to-equity swap implemented by China Aluminum Corporation(hereinafter referred to as ?China Aluminum?)as a research case,applying case analysis and comparing financial indicators to its basic situation,production and operation,and before and after the conversion.Research on financial status,shareholding structure and internal governance structure,analyze the impact of debt-to-equity swaps on Chinalco,and identify the risks and problems in the process of Chinalco debt-for-equity swaps,so as to propose targeted recommendations.Through analysis and research,this China Aluminum Corporation implemented debt-to-equity swaps to reduce interest-bearing loans by 12.6 billion yuan,saving interest costs of 700 million yuan per year,which has improved the company's financial situation to some extent,but the company's operating efficiency and internal governance structure.Did not produce much change.In this regard,in the process of debt-to-equity swap,Chinese enterprises should correctly grasp the goal of debt-to-equity swap,adhere to the principles of legalization and marketization,and combine market-oriented debt-to-equity swap with private capital to enhance the competitiveness of the state-owned economy market.With debt-to-equity swaps as a means to reduce corporate financial leverage,improve corporate governance structure and truly enhance corporate profitability.The conclusions drawn in this paper provide a theoretical and practical reference for how the Chinese government formulates reasonable and feasible policies and how banks can implement debt-to-equity swaps.