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Analysis Of Market-oriented Debt-to-Equity Swap In Hua Ling Steel Under The Deleveraging

Posted on:2021-06-05Degree:MasterType:Thesis
Country:ChinaCandidate:Y YuFull Text:PDF
GTID:2481306272970249Subject:Master of Accounting
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Since the outbreak of the financial crisis in 2008,the leverage ratio of Chinese enterprises has soared extremely,and the high leverage of enterprises will lead to higher financial risks and affect their planning for long-term development.And the high lever enterprise in the iron and steel enterprise occupies a large part,as our country economy lifeline industry,the high lever will cause a series of problems.So the state requires companies to make deleveraging a priority.On October 10,2016,the relevant document the Opinions on Actively and Steadily Reducing the Leverage Ratio of Enterprises were promulgated.In this document,it shows that debt to equity will be one of corporate deleveraging.Therefore,China’s new round of debt-to-equity swap started.This is a maket-oriented and rule of law debt-to-equity conversion.It is of great significance to reduce the pressure of enterprise debt and improve the investment willingness and profit level of enterprises.This paper combs the motivation,effect and characteristics of debt-for-equity swap at home and abroad through literature research and summarizes it.On the basis of expounding the concept of debt-to-equity conversion and related theories,this paper analyzes the new path of market-oriented debt-to-equity conversion(“introducing investors to increase capital and repay debt to buy high-quality assets” two-step new model)and the motivation of developing market-oriented debt-for-equity swaps.Then it analyzes the performance of its debt-to-equity swap,summarizes the successful experience of the market-oriented debt-to-equity swap in Hua Ling Steel,and puts forward some suggestions for other similar enterprises to implement the debt-to-equity swap in the future.In the case analysis,this paper first combs the process of implementing market-oriented debt-to-equity conversion of Hua Ling Steel and analyzes the purpose of implementing market-oriented debt-to-equity conversion of Hua Ling Steel.Secondly,it analyzed the motivations of market-oriented debt-to-equity swap from three aspects: industry,policy and internal of the company,and found that Hua Ling Steel had serious losses,high corporate leverage and large financial risks.In order to explore the contribution of market-oriented debt-to-equity conversion to enterprises in the long and short term.This paper use financial index,non-financial index,free cash flow discount method and event research method toanalyze the implementation effect of the project from four angles: financial,non-financial,enterprise value and market reaction.It was found that market-oriented debt-to-equity swaps could ameliorate the operation and financial situation of Hua Ling Steel in the whole,and improved its profitability and solvency.Its asset-liability ratio has decreased by 19.15%,which has eased the debt pressure of enterprises.The continuous operation ability of the enterprise has increased the overall value of the enterprise by 40.99 percentage points.Then,through the above analysis,we can see that Hua Ling Steel’s debt-to-share conversion has taken a very good effect.It is one of the successful implementation of this round of debt-to-equity enterprises.Hua Ling Steel’s main experience in successfully implementing debt-for-equity swap is that it chooses high-quality enterprises as the object of debt-for-equity swap,pays attention to their own scientific research ability in the process of implementation,introduce multi-agency to participate in the debt-for-equity swap,adhered to the principle of marketization and legalization in the negotiation with various organizations and have a reasonable pricing for both sides of the reference.Finally,on the basis of analyzing and summarizing the case of Hua Ling Steel,it is proposed that enterprises should strictly choose the target of debt-to-equity swap in the process of implementing debt-to-equity swap,adhere to the principle of “marketization and legalization” and relevant departments continue to improve the corresponding laws and regulations,so that debt-to-equity swaps can be quickly landed and successfully implemented.
Keywords/Search Tags:Hua Ling Steel, Market-oriented Debt-for-equity, Enterprise Value, Deleveraging
PDF Full Text Request
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