Case Study On Market-Oriented Debt-to-Equity Swap Of Yunnan Tin Company

In recent years,as China's economic growth has slowed down and the downward pressure on the economy has continued to increase,many companies have fallen into financial distress,the asset-liability ratio has continued to rise,they are burdened with heavy debts,and they face the risk of insolvency of debt principal and interest.Some companies have even Debt default.Since 2010,Chinese loss-making enterprises have experienced rapid growth in losses,which has nearly quadrupled in a few years,from 235.918 billion yuan in 2010 to 936.684 billion yuan in 2015.In this context,the State Council listed deleveraging as one of the five major tasks of supply-side structural reform,and reducing corporate leverage was the main content.Since then,in order to further effectively reduce the corporate debt ratio and maintain the stability of China's financial system,a new round of debt-to-equity swaps was officially launched in October 2016.Compared with the debt-to-equity swap 17 years ago,the biggest feature of this time is the marketization.The various stages of the implementation of the debt-to-equity project are determined by the market,and the government only plays a guiding role.In order to study the impact of this round of market-oriented debt-to-equity swaps on enterprises,this article takes the leading company in the non-ferrous metal industry as an example,using event research method,financial index analysis and other methods to study this round of market-oriented debt-to-equity conversion.At the same time,Yunnan Tin Group,the holding parent company of Tin Co.,Ltd,participated in the previous round of policy-based debt-to-equity swaps,and hopes to provide experience and lessons for subsequent companies that carry out debt-to-equity projects through the analysis of this representative case.This article first introduces the research background and significance,and clarifies the research status of debt-to-equity swaps at home and abroad.Secondly,it introduces the case,describes the implementation results of Yunnan Tin Group's first debt-to-equity swap,and further introduced the conditions under which the Tin Co.,Ltd can implement the debt-to-equity swap.It also explained the implementation of the corporate debt-to-equity project.Then,it analyzes the operation mode of the market-oriented debt-to-equity swap of Tin Co.,Ltd.and the impact on the company.It is explained through three parts: stock price,financial status and internal governance.Finally,it is concluded that the implementation of debt-to-equity swaps will have a certain positive impact on the companies that convert to equity,which will not only help companies get rid of financial difficulties,but also help improve their internal governance and promote the long-term healthy development of enterprises.The steps give some suggestions on steadily advancing this round of market-oriented debt-to-equity swaps.