The Case Analysis Of Huiyuan Juice's Convertible Bond Default

Convertible bond,as a special kind of corporate bond,has become one of the main financing tools considered by China's listed companies in recent years,because of the flexibility brought by its equity conversion.However,since convertible bond is essentially still bonds before it is converted,so the possibility of its default still exists.Under the strict approval regulations currently,the event of convertible bond's default has not occurred in China so far,but with the normalization of bond's default and the gradual relaxation of convertible bond's issuance conditions,the event of convertible bond defaults in China is an inevitable result in future.Therefore,it is very necessary to analyze the reasons with the existing cases of convertible bond default and make pertinent suggestions to company,which is trying to issue convertible bond in the future.This article takes Huiyuan Juice's convertible bond default event that occurred in January 24^th,2019 as the starting point for research.By sorting out a series of events that occurred before the issuance,during the existance and after the default of convertible bond,four main reasons of the default have been found:Firstly,when designing the terms of convertible bond,Huiyuan Juice did not correctly consider the pressure it faced after the failure of the stock conversion,which foreshadowed the final result of default;Secondly,Huiyuan Juice failed to judge the trend of the market correctly to choose the right timing for issuance,resulting in the company's stock price fell sharply after the issuance of convertible bonds,and was still under the initial conversion price when the suspension was announced on April 3^rd,2018;Thirdly,Huiyuan Juice failed to establish an effective supervision and management mechanism inside,which led its financial personnel provided loans to its chairman Zhu Xinli's affiliated company without the approval of the management,made its stock suspended after this incident was exposed,and also indirectly led to the failure of the conversion of convertible bonds later on;Fourthly,the financial of Huiyuan Juice in recent years was not in a good condition,and it suffered further after the illegal loan provision incident,making it impossible to pay full cash and redeem the bonds when the maturity date of the convertible bond is coming,and eventually led to the occurrence of default events.In the course of this research,this article takes the idea of combining the analysis of the default of Huiyuan Juice's convertible bonds and the financing process of convertible bonds,and analyzes the events of convertible bonds in the issuance stage,existence stage and maturity stage as a complete event,showing readers how Huiyuan Juice's problems have led them to the final result of default,and also enriched the academia's case studies on the causes of convertible bond's default.In addition,as a well-known enterprise in China's juice industry,Huiyuan Juice is undoubtedly well-known in China.At the same time,the event ofdefault has been occured less than a year and a half since the incident,and there is no relevant detailed research in the domestic academia,which proves the significance of this research.