Case Study Of Chongqing Steel Market Debt-to-equity Swap

Since 2015,China's economy has entered a stage of "new normal",the non-performing asset market has been expanding,and the number of participants in the non-performing asset industry has also increased.In the past two years,affected by the economic downturn,the non-performing asset market has continued to expand.Debt-to-equity swap,as an important method of debt restructuring,is widely used to deal with the problem of non-performing assets.China has conducted two rounds of debt-to-equity swaps.The first round was the policy-based debt-to-equity swap initiated in the late 1990 s to solve the problem of non-performing assets of large state-owned enterprises,and the second round began in 2016 with the market-oriented debt-to-equity swap,mainly aimed at reducing corporate leverage.Steel industry is a key industry in the supply-side structural reform under the new normal economic situation.Among the economic tasks of the central economic work conference,deleveraging is one of the key tasks.The first deleveraging conference of the steel industry in2017 proposed to reduce the asset-liability ratio of the industry to below 60% within 3-5 years.Li Xinchuang,director of the metallurgical industry planning and research institute in 2019,said the steel industry still needs to accelerate deleveraging to deepen supply-side reform.As an important steel enterprise in southern China,Chongqing steel experienced a "particularly significant and unprecedented" bankruptcy reorganization in 2017.In this process,Chongqing steel used the law-based and market-oriented debt-to-equity swap to explore a new reform path for state-owned enterprises with multiple complex factors including listed companies,large enterprises and traditional industries,providing a replicable example for the restructuring of large state-owned listed companies.This paper takes the market-oriented debt-to-equity swap of Chongqing steel bankruptcy reorganization as the research object,and adopts the literature research method,comparative research method and case study method.Firstly,it summarizes the background and implementation requirements of the two debt-to-equity swaps,and summarizes four debt-to-equity swap modes,such as debt repayment by issuing shares and debt repayment by becoming a shareholder.Then it introduces the motivation,implementation plan and restructuring process of Chongqing steel to carry out market-oriented debt-to-equity swap.Then,it analyzes the implementation mechanism,types of the mode and exit mechanism of the market-oriented debt-to-equity swap process,and compares and analyzes the relevant capability levels before and after the implementation of debt-to-equity swap in Chongqing steel,and draws the conclusion that the market-oriented debt-to-equity swap improves the financial situation of enterprises,improves the production capacity and internal management level of enterprises,and stabilizes the regional economic structure.Finally,the paper summarizes the enlightenment brought by the characteristics of the debt-to-equity conversion process of Chongqing steel,and puts forward Suggestions for enterprises to formulate comprehensive debt-for-equity program and rights and interests protection mechanism,and for the government to improve the relevant laws and regulations,in order to facilitate the in-depth implementation of the supply-side reform.