Research On The Performance Of Market-based Debt-to-equity Swap For Private Enterprises

The first round of policy debt-to-equity swaps came into existence in the 1990 s,solving the debt woes of state-owned enterprises and divesting the non-performing assets of the four major state-owned commercial banks.Nowadays,the world economic situation is uncertain,the downward pressure on China’s economy is increasing,the economic development is in the state of "three periods overlapping",and China is in urgent need of finding new economic growth points.However,the recurrence of the debt crisis has once again brought the issue of non-performing assets of commercial banks to the forefront.Against this backdrop,the concept of debt-to-equity swap was once again put forward and the State Council issued a policy document in 2016 to encourage eligible enterprises to actively participate in marketbased debt-to-equity swaps.The current round is different in many aspects from the policybased debt-to-equity swaps implemented in the last century and is more suitable for the current national conditions in China.However,it is not difficult to find that in the process of market-based debt-to-equity transfer,the market-based debt-to-equity transfer of private enterprises has been more slowly promoted.Therefore,this thesis analyses a case of a private enterprise successfully implementing a debt-to-equity swap,and attempts to draw lessons from it for the reference of subsequent private enterprises trying to carry out debt-to-equity swaps.Firstly,in the introduction section,on the foundation of clarifying the background and significance of the chosen topic,the relevant literature at home and abroad is sorted out and the core viewpoints are extracted,and then the main contents and research approaches,innovations and shortcomings of this thesis are outlined.In the first chapter,the theoretical foundation section introduces the concept of debt-to-equity conversion and its related theories;then the third section is the current situation section,which introduces the development status from two dimensions: policy-based debt-to-equity conversion and market-based debt-to-equity conversion;the fourth section is the case introduction section,including the case company’s operation and the introduction of debt-to-equity conversion scheme;the fifth section is the case analysis section,which examines the performance impact of debt-to-equity conversion from two perspectives: long-term and short-term.The fifth part is a case study,which examines the performance impact of debt-to-equity conversion from both long-term and short-term perspectives;and the last part is a summary of the conclusions and recommendations based on the previous thesis.The thesis ultimately concludes that,firstly,the Yuanxing Energy debt-to-equity conversion project has reduced the debt burden and optimised the capital structure.Secondly,the case of Yuanxing Energy’s debt-to-equity conversion not only has a positive short-term effect,but also increases the value of the company itself.Thirdly,Yuanxing Energy’s debtto-equity conversion project has improved the company’s governance capacity.However,there are inevitable flaws in this debt-to-equity project,and this thesis then makes the following recommendations: First,always adhere to a market-oriented approach to steadily promote debt-to-equity conversion for private enterprises.Secondly,private enterprises should establish a sound information disclosure system and improve their corporate governance capacity.Third,creditor banks should improve their ability to manage asset quality.Fourth,implementing institutions should choose an appropriate debt-to-equity implementation model.Fifth,the access mechanism should be improved and exit channels should be enriched.