Research On The Solution Of Debt Default Of Yongtai Energy Co.Ltd

The "wave of default" broke out in China's bond market in 2016,and the growth momentum of the default debt in 2017 was alleviated.After entering 2018,under the dual influence of tightening market regulatory policies and the decline of investors'overall risk appetite,the debt default has entered another climax,especially the default in the bond market which has attracted extensive attention from scholars.By the middle of January 2019,242 bonds issued by 105 entities in China's bond market had defaulted,with the principal amount of the defaulted bonds reaching 194,628 million yuan.In the cycle of debt default,private enterprises have a poor ability to resist risks,which will often cause a chain reaction due to the default of a certain debt,thus making the whole enterprise into a debt dilemma.On July 5,2018,the short-term financing bonds for the fourth term of 2017 issued by the coal electricity industry corporation giant Yongtai energy co.,LTD which worth 150 million yuan was failing to complete the payment,which constituting a material default.Since then,shares and bonds of Yongtai energy had both been suspended,and the ratings of issuing subjects and other existing bonds had been downgraded.The shares of controlling shareholders had also been frozen and further aggravating the debt crisis.As of the end of September 2018,the company had 34.292 billion yuan of rigid debts due this year,including about 21.687 billion yuan of loans from financial institutions and 12.605 billion yuan of bonds payable,which caused great concern among investors.Starting from the default bonds of Yongtai energy co.,LTD.,this study conducted an in-depth study on the debt structure and operating conditions of the company and found that the overall profitability of the company was relatively stable in the past three years,but due to the tight capital chain caused by aggressive expansion,liquidity was difficult to continue.Further from the financial market environment level,coal power industry level and the company's internal operation level to analyze the reasons for its debt default,found that the company's high debt is the main cause,the external financing environment is the cause of tightening.On this basis,this study proposes a solution to the problem of debt default of which "cash deferred payment of 26.318 billion + one-time cash payment of 3.49 billion +long-term retained debt of 23.111 billion + debt-for-equity swap of 24.686 billion" and a total of 77.605 billion yuan of debt restructuring.Specific debt funding scheme is that cash settlement bases on its own monetary fund liquidity,asset sales,the government liquidity support and introducing strategic investors,and "retained debt" relies on operating cash flow and debt rolling in the later period.As for debt-to-equity swap,the overall design costs 6 years and it's success depends on the joint support and efforts of relevant national regulators,local governments,various creditors and strategic investors.