Analysis Of The Motivation And Economic Effect Of China First Heavy Industries' Special Additional Tailcct Stock Issue

Directional issuance refers to the private issuance of shares by listed companies to a few qualified specific investors.Oriented additional issuance of A-share listed companies in China started in 1998,which is one of the important ways for large and medium-sized enterprises to raise funds to the market,and the issuing target is mainly large shareholders.Directional issuance includes two situations:one is that large investors(such as foreign capital)want to become strategic shareholders or even controlling shareholders of listed companies;the other is to merge and acquire other enterprises through directional issuance financing and rapidly expand the scale.Oriented issuance in the traditional sense will lead to the increase of corporate equity,but it has no impact on corporate debt capital,and has very limited impact on corporate debt situation.The "debt-to-equity swap mode" adopted by China First Heavy Industries,while increasing the equity of enterprises,reduces the debt accordingly,makes a more effective optimization of the capital structure of enterprises,and has certain advantages in reducing the pressure of enterprises' liabilities and financial risks.This paper studies the motivation of debt-to-equity swap in China First Heavy Industries,and compares its financial situation and market effect before and after.It finds that the debt-to-equity swap has a significant improvement on the company's financial situation,operating condition and market expectation.After the study,this paper preliminarily concludes that,similar to China First Heavy Industries,enterprises that need to protect their important shareholders' equity from dilution,need to optimize their capital structure,and have no obvious cash flow problems can try to adopt the method of debt-to-equity fixed increment,which can improve the overall situation of enterprises with more than one stroke;at the same time,we should also pay attention to the fact that debt-to-equity fixed increment is only a short-term plan,and look at enterprises in the long run.Industry should support late policies to protect the rights and interests of small and medium-sized shareholders,turn losses into profits and upgrade the industry from the root causes.