A Case Study On Market-oriented Debt-to-equity Swap Of Shaanxi Coal And Chemical Industry Group

Under the background of macroeconomic growth slowing down,some enterprises have carried a heavy debt burden under the double blow of their own poor operating capacity and overcapacity.They need to pay huge interest expenses,and the non-financial sector's leverage ratio rises quickly as well.At the same time,as a commercial bank with the main creditor of corporate debt,the scale and proportion of non-performing loans have also risen.In order to solve these problems,the Party Central Committee and the State Council successively issued a number of policies and guidance to promote market-oriented debt-toequity swaps and ease the pressure on corporate debt repayment.With the "State Council's Opinions on Actively and Firmly Reducing Enterprise Leverage" issued by the State Council in October 2016,it kicked off the prelude to this round of debt-to-equity swaps.Debt-to-equity swaps are a powerful medicine to reduce corporate leverage and commercial bank's non-performing loans.If implemented properly,they can effectively improve corporate governance structure and operational capabilities.However,if they fall into misunderstanding,they will also leave many legacy problems,such as becoming a tool for enterprises avoiding debt maliciously.This paper selects the first domestic debt-to-equity swap of Shaanxi Coal and Chemical Industry Group led by local asset management company SFAMC,and is also the first debt-to-equity project of the city commercial bank as a funder.Firstly,the article summarizes the current theoretical research and main viewpoints on debt-to-equity swaps at home and abroad,and then introduces and analyzes the historical practice of foreign debt-to-equity swaps,and compares the background,environment,methods and effects of two-round debt-to-equity swaps in China.The differences in the aspects put forward suggestions and lessons for the current round of debt-for-equity swaps,pointing out some problems in the current debtfor-equity swaps.Then the article introduced the parties involved in the case of Shaanxi Coal and Chemical Group's Debt-to-equity swap,and made a detailed analysis and discussion on the motives of Shaanxi Coal and Chemical Group's debt-to-equity swap from various angles.Then it introduces the program flow,pricing mechanism,exit mechanism and the effect of debt-to-equity conversion of Shaanxi Coal and Chemical Group's Debt-to-equity swap.The calculation and analysis of the impact of debt-to-equity swap on the financial indicators of Shaanxi Coal and Chemical Group,the debt-to-equity swap model adopted in the case and The pricing was analyzed,and the characteristics and difficulties of this case compared with other debt-to-equity swap projects were analyzed and compared.This paper draws the following conclusions:(1)Debt-to-equity swaps have significantly reduced the asset-liability ratio of Shaanxi Coal and Chemical Group,improved the operational capacity and profitability of enterprises,and alleviated the financial crisis of enterprises.(2)SFAMC has the geographical and human advantages as a local asset management company,but it is also subject to more restrictions from the government.Finally,this paper puts forward some suggestions for better promoting debt-to-equity swaps.