A Study Of Financing Risks Of Continuous Overseas Mergers And Acquisitions Of Nonferrous Metal Enterprises

With the fast development of the Chinese nonferrous metal industry,a production of nonferrous metals is rapidly expanded,and many nonferrous metal enterprises go abroad to obtain overseas mine resources through continuous mergers and acquisitions and supplement resource reserves of the enterprises.The continuous overseas merger and acquisition of the nonferrous metal enterprises has a large transaction amount and a short interval between mergers and acquisitions.Therefore,financing becomes a key to the success of a merger and acquisition project.In this paper,concepts such as mergers and acquisitions,continuous overseas mergers and acquisitions,and financing risks are first defined with reference to relevant literature and documents.A financing condition of the continuous overseas mergers and acquisitions of the nonferrous metal enterprises is introduced,and a motive reason of these is analyzed.Then,taking zijin mining as an example,financing risks of the continuous overseas mergers and acquisitions of the nonferrous metal enterprises are identified,and causes of the financing risks are analyzed.In addition,the financing risks of the continuous overseas mergers and acquisitions of zijing mining are assessed with the degree of financial leverage and the F-score model.Through the identification and assessment of the financing risks of the continuous overseas mergers and acquisitions of the nonferrous metal enterprises,it is found that: A financing risk may be generated due to a large financing amount,a short interval between financing,and a small quantity of financing channels in a process of the continuous overseas mergers and acquisitions of the nonferrous metal enterprises.The continuous overseas mergers and acquisitions of the nonferrous metal enterprises have a single financing manner,and the financing manner centering on debt financing may cause a scale of enterprise debts surging and lead to a high capital structure risk and a high debt service risk to the enterprises.Moreover,changes in an exchange rate and an interest rate would bring a large exchange rate risk and interest rate risk.In view of the financing risks of the continuous overseas mergers and acquisitions of the nonferrous metal enterprises,this paper proposes suggestions for managing the risks:Draw up a reasonable financing plan for continuous overseas mergers and acquisitions,and select a suitable frequency of mergers and acquisitions and a proper financing scale;Combine equity financing and debt financing,and adapt a diversified financing manner including borrowing money from a bank consortium,issuing bonds overseas,introducing exchangeable bonds,directing convertible bonds,cross-border share exchange,and the like;Pay attention to changes in an exchange rate and an interest rate,and arrange experts to analyze a change trend of domestic and international exchange rates and interest rates,to lower an exchange rate risk and interest rate risk.In a level of foreign exchange of management and operation,raise foreign currencies via overseas subsidiary corporations,and perform hedging by using foreign exchange options,interest rate swap,and other financial instruments,to reduce an exchange rate risk;Built an effective risk alarm system,comprehensively supervise merger and acquisition financing services,identify and quantitatively assess possible financing risks,and effectively manage and control the financing risks according to an actual condition of enterprise production and operation,to reduce financing costs and improve a success rate of continuous overseas mergers and acquisitions.According to a risk management procedure,this paper identifies and assesses financing risks of continuous overseas mergers and acquisitions of zijin mining,and proposes suggestions for controlling the risks,which may provide reference for other nonferrous metal enterprises to manage the financing risks of continuous overseas mergers and acquisitions.