Analysis On The Operation Mode And Influence Cases Of Market-oriented Debt To Equity Swap

In recent years,China's economic development has entered a new normal and the domestic supply structure is unbalanced.Enterprises are facing the problems of high debt operation,high leverage ratio,rapid growth of debt scale,and insufficient operation efficiency.The risk of non-performing loans of commercial banks has increased,which may lead to large-scale debt default.In October 2016,the government issued the guiding opinions on debt to equity swap of market-oriented banks(hereinafter referred to as the Guiding Opinions),which guides and advocates the legal and market-oriented debt to equity swap between banks and enterprises,reduces the asset liability ratio of enterprises and the non-performing asset ratio of banks,prevents financial risks,temporarily frees enterprises from financial difficulties and focuses on longer-term development.This paper selects Huarong Energy Co.,Ltd.,which implemented debt to equity swap before the issuance of the guidance,and Yunnan Tin Industry Group(holding)Co.,Ltd.,which implemented debt to equity swap after the issuance of the guidance,to analyze the operation conditions,motivation,mechanism and impact of different operation modes of debt to equity swap from multiple perspectives.In essence,the debt to equity swap of Huarong Energy Co.,Ltd.is a market-oriented debt restructuring,which is a self-help behavior of the enterprise in the event of liquidity shortage and debt crisis.The debt and debt parties reach an agreement to repay the debt through targeted issuance and convertible debt.As the first case of debt to equity swap of local state-owned enterprises after the issuance of the guiding opinions,the debt to equity swap of Yunnan tin industry is more market-oriented and innovative Based on the analysis of the above two different operation modes of debt to equity swap,this paper sums up the relevant experience of the operation mode of debt to equity swap,with a view to providing reference for the future implementation of the operation mode ofdebt to equity swap and the equity withdrawal mechanism of debt to equity swap enterprises,and providing enlightenment for the implementation of market-oriented debt to equity swap.After research and analysis,the following conclusions are drawn: first,the market-oriented debt to equity swap is more flexible than the first round of policy debt to equity swap,which is not put forward when the risk of non-performing loans of commercial banks has accumulated to an uncontrollable stage,and the business operation problems have reached insolvency,but the risk is handled in advance.If the corresponding risks are well controlled,debt to equity can reflect the value discovery,thus creating a win-win situation for both parties.2.Based on the case analysis of Huarong energy and Yunnan Tin Industry's market-oriented debt to equity swap,it is concluded that different debt to equity operation modes have different impact mechanisms and results on the capital structure,equity structure,operation management and performance of enterprises,while the market-oriented debt to equity swap does help enterprises temporarily get rid of financial difficulties,so as to stand for a longer-term development.At last,this paper puts forward some suggestions for the follow-up development of market-oriented debt to equity swap,such as encouraging innovation of the implementation mode of market-oriented debt to equity swap,broadening the financing channels of market-oriented debt to equity swap,and improving the equity management and exit mechanism after market-oriented debt to equity swapThis provides a reference for the follow-up implementation of the market-oriented debt to equity policy and the operation mode of debt to equity enterprises,which is conducive to promoting enterprises to reduce leverage,carry out structural adjustment,restore profitability,and reduce hidden financial risks.