Case Analysis Of Market-oriented Debt-to-equity Swap Of China Gold Group

According to the data of the Bank for International Settlements(BIS)in recent years,China’s non-financial sector has a relatively high leverage ratio.From the perspective of growth rate and total company debt,the ratio of China’s non-financial company debt to GDP has been growing rapidly since 2008,and the indicator has been much higher than that of other major economies.By the beginning of 2018,it has soared to 158.2%.Nowadays,China’s economy is in a critical period of downward structural adjustment.The debt adjustment of non-financial enterprises is a key step to reduce leverage and promote industrial upgrading.As global commodity prices continue to fall,the profits of companies that rely on mining and mineral resource processing With a sharp decline,mineral enterprises are facing the problem that the company’s short-term debt continues to rise and the debt ratio continues to rise,resulting in the company’s uneven distribution of funds and the lagging enterprise development.Under the above background,combined with the work of structural reform on the supply side,in order to do a good job of "three go,one drop,one supplement" and continue to reduce the company’s leverage ratio to achieve a balance,the government launched a series of measures and proposed the market The oriented debt-to-equity swap policy was led by commercial banks in early 2016.China Gold,as the first single state-owned enterprise restructuring debt-to-equity swap project under the suspension of the New Deal by the China Securities Regulatory Commission and the Shanghai Stock Exchange,opened a precedent for the combination of market-oriented debt-to-equity swaps and high-quality asset injection.China Gold’s debt-to-equity swap implementation has the characteristics of novel steps,numerous participants,and numerous sources of funds.Analysis of its debt-to-equity swap innovation method,implementation process,and exit mechanism has good reference and reference for other companies to implement debt-to-equity swap.value.The article first briefly introduces China Gold and its subsidiaries involved in debt-to-equity swaps and financial analysis before conversion,combining the case background and implementation plan of market-oriented debt-to-equity swaps in a policy environment that encourages market-oriented debt-to-equity swaps,elaborating in detail The timeline and the entire process of China’s gold market debt-to-equity swap.This chapter analyzes the implementation benefits of debt-to-equity swaps from two aspects.The first aspect is to analyze the impact of debt-for-equity swaps on thecompany.Mainly from the analysis of several indicators such as profitability,operating capacity,earnings per share,asset structure,debt structure,and solvency;the second aspect is to analyze the risks faced by China Gold during the entire market-based debt-to-equity swap process and future operations.The conclusion is drawn that the company’s financial and operating conditions have improved significantly after market-oriented debt-to-equity swaps.The article also analyzes the company’s development prospects after China’s gold has been injected into the high-quality assets of Inner Mongolia’s mining industry.Where it can be learned: At present,market-oriented debt-to-equity swaps still have problems related to imperfect policies,imperfect exit mechanisms,and low market enthusiasm.The suggestion on these issues is that the government should introduce new policies to simplify the debt-to-equity swap process To reduce the tax burden of debt-to-equity swaps by enterprises,improve the governance issues after equity swaps,and play a leading role in stimulating market enthusiasm,using multiple levels of development to broaden equity exit channels.