Research On The Implementation Of Debt-to-equity Swap In Nangang Steel

At present,China's economy has entered a period of slowing growth and structural adjustment,and the previous stimulus policies have also entered the digestive stage.Systemic risks are increasingly exposed.Among them,the leverage ratio of enterprises is too high,and the rapid growth of non-performing loan ratios of banks is the most worrying.To this end,in October 2016,the State Council issued the "Guiding Opinions on Converting Equity from Marketized Banks",officially launching a new round of debt-to-equity swaps.Compared with the previous round of debt-to-equity swaps,this time will adopt the principles of marketization and legalization to help enterprises reduce leverage,improve corporate governance,and promote enterprise transformation as the goal-oriented,without setting the optimal model.However,as of the end of 2018,the new round of debt-to-equity swap funds reached 505 billion,the capital availability rate was less than 27%,and the scale of private enterprises has not exceeded 40 billion.The debt-to-equity swap has not been smooth.Based on this status quo,this paper selects the debt-to-equity swap project of Nangang Steel as the research object.This is the first privately-owned enterprise debt-to-equity swap project in China since the launch of the new round of debt-to-equity swap.The author tries to help the participants to re-examine the transaction through case study and research,and hopes to provide case reference and reference for private enterprises to implement debt-to-equity swap.In the process of research,the private enterprises that were not covered by the previous round of debt-to-equity swaps were selected.From the perspective of outsiders,the multi-interest game process was analyzed.Firstly,a new round of debt-to-equity swaps was systematically sorted out,and the status quo and characteristics were summarized.It discusses the difficulties and development prospects of the private enterprises.In the case part,the issue of the balance of interests of the debt-to-equity swap program was discussed.The motivation of the participants was analyzed.The structural design,pricing and the scale of the equity conversion were analyzed.The costs and benefits of the main participants were discussed.The effect of the implementation of debt-to-equity swaps was evaluated.Through analysis,it was found that although the Nangang Steel Debt-to-equity swap project passed a reasonable implementation plan,it solved a series of difficult problems and achieved the project landing.The company has successfully got rid of its financial difficulties,and the construction bank and related parties have obtained considerable returns.The creditor funds have been successfully recovered and achieved a multi-party win-win situation.However,the debt-to-equity swap project has a high cost for the company,and the construction bank and related parties as implementing agencies ignore the problem of participating in corporate governance and eager to withdraw.Nangang Steel should pay attention to the cost of debt-to-equity swaps,continuously optimize the capital structure,break through the business model,seek new kinetic energy,and fundamentally improve profitability.China Construction Bank and related parties should actively participate in corporate governance,and optimize the exit mechanism.Finally,based on the success or failure of the implementation of debt-to-equity swaps in Nangang Steel,this paper concludes that through a reasonable implementation plan,private enterprises also have the opportunity to participate in the new round of debt-to-equity swaps to achieve multi-party win-win results.And from the perspective of the government,implementing agencies and share-traded companies,it is recommended to promote a new round of debt-to-equity swaps.