Financial Risk And Performance Of Market-Oriented Debt-to-Equity Swap

Debt-to-equity swap is the default debt of state-owned enterprises sold by state-owned commercial banks to some financial asset management companies by lowering the price.These debt-holding financial asset management companies turn debt into holding the state-owned enterprises in arrears.Under the background of reducing high productivity,high inventory and high leverage,China has implemented a new round of market-oriented debt-to-equity swap in 2016.The characteristics of this round of debt-to-equity swap are to increase the scope of enterprises that can participate in it,and to make full use of the decisive role of the market to help enterprises reduce financial leverage,improve business efficiency and improve the management of enterprises.Meanwhile,it also reduces the possible financial risks of enterprises.Firstly,this paper collates the current domestic and foreign research results on debt-to-equity swap,and at the same time,evaluates these data.Next,through the analysis and introduction of the implementation purpose and conditions of debt-to-equity swap,this paper leads to the evaluation of the current situation of debt-to-equity swap in China.Then,we compare the two rounds of debt-to-equity swap in China,analyze the differences between the two rounds of debt-to-equity swap,and highlight the characteristics of this round of debt-to-equity swap in China..The case selected in this paper is Shandong Energy Group.It is a modern energy enterprise in China,and it is also a representative enterprise of a new round of debt-to-equity swap.Because the energy industry itself is in a downturn,but also because of its own investment mistakes,Shandong Energy Group is facing a particularly serious financial crisis.Then,this paper briefly introduces the scheme of debt-to-equity swap of Shandong Energy Group.Next,this paper analyses the scheme of debt-to-equity swap of Shandong Energy Group,compares various performance indicators before and after debt-to-equity swap,and illustrates the feasibility of debt-to-equity swap of Shandong Energy Group.The characteristics of debt-to-equity swap of Shandong Energy Group are described,and the expected effect after debt-to-equity swap is analyzed and estimated.Secondly,the source of financial risk of debt-to-equity swap of Shandong Energy Group is analyzed,and the actual situation of the development of the enterprise is considered.The related financial risk that debt-to-equity swap policy may bring to Shandong Energy Group is identified.Combining with the specific situation of the enterprise,this paper analyses how to prevent the financial risk of debt-to-equity swap and puts forward some measures to deal with the possible financial risk of debt-to-equity swap.Finally,through the analysis of Shandong Energy Debt-to-Equity Swap Plan,this paper illustrates the feasibility of a new round of debt-to-equity swap in China and the financial risks that should be paid attention to in participating in a new round of debt-to-equity swap enterprises,and gives some suggestions on the implementation of a new round of debt-to-equity swap in China.Market-oriented debt-to-equity swap can fully alleviate the financial pressure of enterprises with higher financial leverage and help enterprises with higher financial leverage to further develop.Through the analysis of Shandong energy debt-to-equity swap plan,we can see that a new round of market-oriented debt-to-equity swap is feasible,but there are still some problems in the implementation process.Only by perfecting their own governance and improving their management level,can they give full play to the role of market-oriented debt-to-equity swap,and can debt-to-equity swap really help enterprises with higher financial leverage to reduce their financial leverage.Debt-to-equity swap enterprises should get rid of their financial crisis through various ways.Debt-to-equity swap is only one of the alternative ways to help enterprises develop.Enterprises can not regard debt-to-equity swap as a way to clear up debts,let alone the only way to develop enterprises.