Study On The Financial Impact Of The New Round Of Debt-for-equity Swap On Nangang

In recent years,China's economy has entered a slowdown,structural adjustment stage,economic stimulus and other policies have also entered the digestion stage,and some enterprises have suffered from high leverage and huge debt due to this impact,which has led to an increase in non-performing loans.The emergence of this series of problems is worrying.To this end,a new debt-to-equity swap policy emerged at the historic moment.In October 2016,the State Council promulgated the "Guiding Opinions on Debt-to-Equity Conversion of Market-oriented Banks",which sounded a new round of debt-to-equity swaps for Chinese enterprises.Compared with the first debt-to-equity swap in the 1990 s,this round of debt-to-equity swaps is mainly based on marketization and legalization,with the goal of helping companies reduce leverage,reduce debt burden,and enhance corporate value,and effectively implement State Council policies.Help enterprises to overcome temporary difficulties.From the announcement of the new debt-to-equity swap policy by the State Council to the end of 2018,the actual funds in place in this round of debt-to-equity swaps were 505 billion,and the rate of completion was less than 27%.The deepening of debt-to-equity swaps has not been smooth.Nanjing Iron & Steel Co.,Ltd.actively responded to the new debt-to-equity swap policy.It is the first private enterprise in China to implement debt-to-equity swaps,which is typical.This article takes Nangang Steel's debt-to-equity swap as the research object.Through research and case analysis,it is expected to provide a useful case reference for other private enterprises' debt-to-equity swap.There are five chapters in this article.Chapters 1 and 2 first explain the meaning of debt-to-equity swap and related theories,and make a comparison between the new and old debt-to-equity swaps.Chapter 3 discusses the company from the background of Nangang Corporation and its own needs Motivation for debt-to-equity swaps.In the case part of Chapter 4,we discuss the financial impact of the debt-to-equity swap program.From short to long-term,we analyze the financial impact of debt-to-equity swap on Nanjing Iron & Steel Co.,Ltd.and evaluate the effect of debt-to-equity swap.Through analysis,it was found that Nanjing Steel Co.,Ltd.successfully got rid of the financial difficulties,and its own value has been greatly improved.It not only solved Nanjing Steel 's “urgent need” but also gave creditors a “heart”.Chapter 5 summarizes the success and failure of the debt-to-equity swap of Nanjing Iron and Steel Co.,Ltd.,and concludes that debt-to-equity swap is of great benefit to enterprises.The conclusions show that:(1)Debt-to-equity swap helps to optimize corporate governance structure and promote diversification of equity structure.(2)The deep-seated problems of the company can be reconsidered through the fluctuation of stock price during the same period.(3)Debt-to-equity swaps are beneficial to reduce corporate financing costs.(4)Debt-to-equity swap is conducive to improving the company's financial situation,reducing leverage,and enhancing corporate value.Finally,it puts forward suggestions for the company's future debt-to-equity swap.