A Case Study On The Effect Of Market-oriented Debt-to-equity Swap In China CSSC Holdings Limited

At the end of the last century,under the background of large losses in nationalized business and high levels of bad debts in banks,Chinese government conducted the first round of debt-to-equity swaps led by the government.At present,China is facing the pressure of economic downturn and overcapacity in some industries,and corporate leverage ratio remains high.As a result,Chinese government has restarted a new round of debt-to-equity swaps after 17 years later.Nowadays,this poicy is no longer dominated by the government,but requires that the markets leading role be highlighted.There are not a few companies that want to catch up with this reform.They hope to reduce debt burdens,improve profitability and achieve sustainable development by doing market-oriented debt-to-equity swaps.However,this policy is still in the development and exploration stage,which means its implementation methods and implementation effects need to be explored.China CSSC Holdings Limited is a leading central enterprise in the shipping industry,and it is also a listed company that implemented market-oriented debt-to-equity swaps earlier in China.The "two-step" model adopted by it has significant advantages.For the purpose of providing reference for other companies,this paper selects the case of China CSSC Holdings Limited,and analyzes its implementation effects.Firstly,this article generalizes the researches of relevant scholars in the world,summarizes the motivations,effects and risks of debt-to-equity swaps,and uses tradeoff theory and agency theory as the theoretical basis of this articles related analysis.Secondly,it not only introduces the development history about it in my country,but also presents and compares the relevant background,policies,and implementation in order to highlight the importance of implementing market-oriented debt-to-equity swaps.Thirdly,the implementation status in China CSSC Holdings Limited is described in detail from the four aspects of operation steps,implementation subject,pricing mechanism and exit mechanism.At the same time,combined with the macro background,industry status and the specific situation of the company,it analyzes the motivations for its implementation,including improving profitability,solving the debt crisis,improving the equity structure,and conforming to national policies and group strategies.Finally,this article explores the specific implementation effects of marketoriented debt-to-equity swap in China CSSC Holdings Limited from the perspectives of financial performance,EVA,and corporate governance,and summarizes its implementation experience.In terms of financial performance,its debt solvency has been enhanced by reducing corporate debt,profitability has been improved by optimizing resource allocation,and development capabilities have been ensured by optimizing industrial layout;in terms of economic performance,the EVA of this company has turned from negative to positive which means that the value of the company has increased;in terms of corporate governance,its shareholding structure has been optimized to a certain extent,but since investors have not yet entered the board of directors,there is still room for improvement in its governance structure.Based on analysis and research,this article recommends that we should choose a reasonable method to determine the participating institutions and improve pricing and exit implementation mechanisms.Besides,we should use the opportunity of marketoriented debt-to-equity swaps to optimize the industrial structure and governance structure,establish a long-term development mechanism for enterprises,so as to achieve the goal of helping enterprises develop with high quality.