Research On The Financial Performance Of Debt-to-equity Swap Of Chinalco

In recent years,China has begun structural reforms,reducing economic growth and entering the new normal of the Chinese economy.With the implementation of supply-side reforms,many companies are facing problems such as excessive debt burdens,increasing leverage,and declining business capabilities,which have severely affected China’s economic development.In order to solve the problem of high leverage,reduce the bank risk caused by bank loan ratio to prevent systemic financial risk,promoting the reform of the internal governance structure and improving business efficiency,a new round of market-oriented debtto-equity swap is launched.The main issues studied in this article are under the background of state-owned enterprises’ mixed ownership reform,reducing the high asset liability ratio of enterprises,the main issue of this document is how the implementation of market-oriented debt in securities swap will affect the operation and management of enterprises,and how it will affect the financial performance of enterprises.This paper takes Chinalco as the case study object,through reading and sorting out a large number of literature,case analysis,comparative analysis method to study the influence of Chinalco’s market-oriented debt-to-equity swap on its financial performance.As a leading enterprise in nonferrous metal industry,Chinalco has actively responded to the call of the state to adjust its structure,assumed the responsibility and obligation of the state’s supply side structural reform,and,according to the actual situation of the enterprise’s own development,and insisted on "marketization and legalization",formulated the two-step plan of "debt to equity" to actively implement debt-to-equity swap,which provides a way for other enterprises to carry out debt-to-equity swap in the future Reference samples.In this paper,the initial situation,production and operation of the company are examined by case analysis and comparative analysis of the financial indicators,internal and external factors of debt-to-equity swap,and financial situation before and after the implementation of debt-to-equity swap.The impact of debt-to-equity swap on the operating and financial performance of Chinalco is analyzed,and the potential risks that Chinalco may face after the completion of debt-to-equity swap are proposed Rel EVAnt suggestions were made.Through the analysis and Research on the traditional financial indicators and the financial performance EVA luation based on EVA theory,the findings are as follows: exercise the debtto-equity swap of Chinalco effectively reduces the asset liability ratio of the enterprise,and the asset liability ratio of the four target enterprises has been greatly reduced,especially the asset liability ratio of Chinalco mining decreased from 90.95% before the debt-to-equity swap to 25.99%,down 6% 4.96%,and the effect of deleveraging is significant.The decrease of the asset liability ratio of the four target enterprises directly affects the asset liability ratio of Chinalco to fall below the 70% warning line.The leverage of the enterprise has been effectively controlled and the financial pressure of the enterprise has been relieved.Chinalco implements the "two-step" plan of debt-to-equity swap,which effectively reduces the interest bearing loan of 12.6 billion yuan of Chinalco The loan can save 700 million yuan of interest expenses every year,which reduces the financial expenses of the company to a certain extent,and improves the financial situation of the company to a certain extent.However,the debt-toequity swap has not greatly affected the company’s performance and internal management structure have not undergone significant changes.Chinalco’s "two-step" plan of principle of "commercialization" of debt of the selection of subsidiaries’ targets,the formulation of stock pricing plan and the selection of exit mechanism.It is worth for other enterprises to learn from it according to their own situations.Although the implementation of this plan of debt-to-equity swap has made Chinalco achieve good results in deleveraging,it still faces the internal governance structure of the company risks that cannot be improved,refinanced and shareholders’ rights cannot be guaranteed.Therefore,the follow-up debt to joint-stock company must correctly determine the purpose of transferring debt to shares,maximize the role of debt to equity,enhance the competitiveness of enterprises on the basis of legal system and marketization,reduce the asset liability ratio of enterprises,improve the corporate governance structure,fundamentally improve the profitability of enterprises,prevent enterprises from refinancing,and ensure the sustainable development of enterprises.Through the case study of Chinalco,it can provide some reference value and significance for other enterprises to implement debt-to-equity swap in the future.