The Motivation And Effect Of Market-oriented Debt To Equity Swaps In Iisted Companies

Market-oriented debt to equity swaps is an effective way to solve corporate debt crisis,which means to convert creditor's rights into debt company's equity in a marketoriented way.In the past three years,the leverage ratio of China's non-financial enterprises has remained high and the domestic bond market has witnessed frequent defaults.To reduce corporate debt,on October 10,2016,promulgated by the state council "about actively yet prudently to reduce enterprise's opinions on leverage,and introduced the guidance of market-oriented debt to equity of bank ",encourage company which is promising but struggle to survive open market-oriented debt to equity swaps.At present,the contract amount of market-oriented debt to equity swaps has exceeded 1.7 trillion yuan.However,due to the lack of experience and exploration time of market-oriented debt-for-equity swap in China,the promotion of marketoriented debt-for-equity swaps is faced with such problems as insufficient capital sources,imperfect exit mechanism,difficulty in selecting high-quality projects,and the pricing of stock.At present,most theoretical researches on debt to equity swap are based on the perspective of the first round of "policy-oriented" debt to equity swaps,The motivation,role and problems in the process of "policy-oriented" debt to equity swaps are mainly studied.However,there are few researches on debt to equity swaps paying attention to the perspective of marketization.In order to make up for the deficiencies of the existing research,this paper selected specific cases of market-oriented debt to equity swaps for study,providing reference for listed companies to carry out market-oriented debt to equity swaps,which is more realistic and practical.This paper discusses the advantages of "market-oriented" debt to equity swaps over the first round of "policy-oriented" debt to equity swaps.ST Sainty Ship's marketoriented debt to equity swap case was selected as the research object.This paper explore the reasons for the debt crisis of ST Sainty Ship,namely,the continuous downturn of the shipping industry,poor operation of main business,large amount of capital occupied by non-ship business,and continuous external financing of the company,which led to the debt crisis.This paper analyzes the "asset restructuring and debt to equity swap" program carried out by Sainty Ship,and reveals the short-term and longterm effects of the market-oriented debt to equity swap carried out by Sainty Ship.In short-term effects,a number of financial indicators of the company have been improved,including short-term solvency,profitability and cash flow.After the conversion of corporate debt into equity,through the analysis of the company's stock price and trading volume,the original creditors can realize debt repayment through secondary market transactions.In long-term effects,Sainty Ship reduced the weighted average cost of capital by improving its capital structure,established a series of board committees to improve the company's incentive and constraint mechanism,and formulated detailed future development strategies to improve its corporate governance structure.This paper proves that the market-oriented debt to equity swap mode of "asset restructuring and debt to equity swap" is conducive to solving the debt crisis of enterprises and removing delisting risk warning,Sainty Ship retained listing status.