| With the rapid development of economy and the acceleration of the industrialization process,environmental pollution is increasingly serious,and the importance of environmental protection is more and more high.Since the 18th National Congress of the Communist Party of China,the scope and depth of ecological civilization construction have been expanding.The 14th Five-Year Plan also regards ecological protection as an important part of China’s green development.Among them,in order to strengthen the efforts of water pollution prevention and control,to ensure people’s water safety,our country has issued a number of policies and regulations,environmental protection enterprises also ushered in a new round of development.On the other hand,sewage treatment enterprises mostly adopt the high-leverage business model.In the context of the continuous adjustment of the economic structure and the continuous impact of the epidemic,corporate debt defaults occur frequently,and the overall debt default risk of the environmental protection industry keeps rising.As a leading comprehensive service provider of water environment in China,Poten Environment has accumulated overdue debts totaling about 2.2 billion yuan from the first overdue debt announcement in September 2020 to the last announcement on July 30,2022.The reasons behind the company’s rise from industry leader to massive debt crisis are worth exploring.In this paper,literature research method,case study method and comparative analysis method are used.By combining the theories related to debt default and the process of debt default,this paper takes Poten Environment as the case company to conduct a single case study.At the same time,by analyzing the company’s financial data,it attempts to conduct a comprehensive and in-depth analysis of the reasons for its large-scale debt default from multiple perspectives,and meanwhile,the effect analysis of the subsequent repayment of debt is carried out.Finally,some suggestions on debt default risk prevention are given to Chinese regulatory system and environmental protection enterprises.Through analysis,it is found that the causes of default of Poten Environmental debt are mainly divided into external and internal factors.From the perspective of external factors of the company:(1)In the period of rapid development of PPP,Poten Environment was encouraged by industrial policies to undertake a large number of PPP.However,because the company did not carefully evaluate the value of the projects and ignored the risks of project follow-up promotion,it was finally affected by the introduction of PPP rectification policies and the "warehouse clearance action",the operating risk increased and the debt default risk increased;(2)China’s revision of financing rules and the promotion of corporate "deleveraging" have gradually tightened the financing environment of Poten Environment,affected the company’s refinancing,multiplied the solvency pressure and increased the debt default risk.However,the main reasons for the large-scale debt default of the company are internally:(1)In the process of diversified development,the company focuses on the distribution of non-closely related businesses,but the business model is inconsistent with the original business model,which aggravates the short-term capital pressure of the company;The continuous loss of this business has weakened the company’s profitability and further increased the company’s operating risks.(2)When the assetliability ratio of Poten Environment continues to rise,it insists on promoting large-scale mergers and acquisitions,which increases the company’s financing payment risk.The subsequent merger and acquisition failure greatly reduced the company’s total profit,the company’s profitability plummeted,and the company’s debt repayment risk increased significantly.(3)The company blindly undertakes a large number of PPP after listing,further expanding the funding gap and financing scale;In addition,the capital advance pressure of PPP is relatively large,which increases the company’s cash flow pressure and the debt default risk increases sharply.(4)The company’s unreasonable debt structure increases the company’s solvency pressure,and the company’s solvency continuously declines,leading to large-scale debt default;(5)Poten Environment’s receivables management level is low,coupled with the company’s PPP concentrated in third-tier cities,the uncertainty of fund repatriation due to the impact of the epidemic increases,and the debt default risk keeps rising.This paper further analyzes the subsequent treatment of defaulted debt.Through the analysis of creditor’s rights compensation plan,short-term stock market reaction and stock price trend,it finds that although some defaulted debt can be repaid quickly through bankruptcy reorganization,investors believe that bankruptcy reorganization has limited improvement effect on the company’s operation,and the market’s low investment willingness increases the uncertainty of the company’s operation.At the same time,stock prices changed little before and after the company’s bankruptcy reorganization.Some creditors may choose to hold shares for a long time,and there is great uncertainty in the real debt repayment rate.Finally,this paper combined with the causes of Poten Environmental debt default,from the level of government departments and enterprises to give countermeasures and suggestions of debt default risk.From the government level:first,the government should improve the long-term mechanism of maintaining financial stability;Second,the government should strengthen the whole process of PPP control.From the perspective of enterprise management:first,enterprises should adjust the industrial layout and management strategy in time according to policy changes;Secondly,enterprises should scientifically choose related business diversification;Third,enterprises should continue to pay attention to M&A risks and use optimized payment methods to reduce payment risks to avoid debt default risks caused by aggressive M&A failure.Fourth,environmental protection enterprises should establish a risk management system for the whole process of PPP,increase the importance of public health emergencies,maintain a good communication relationship with the government,and reduce the risk of fund recovery.Finally,enterprises should determine a reasonable debt structure,pay close attention to the company’s potential external risks,and actively optimize the debt structure.This paper has the following innovative points:Firstly,in terms of research methods,previous studies mainly used empirical research methods to analyze the impact of a single factor on corporate debt default.In this paper,case study method was used,taking Poten Environment as a case company to deeply analyze the causes of debt default,and more comprehensive conclusions could be drawn.Secondly,from the perspective of research,by combining the development process and mode characteristics of PPP,this paper analyzes the impact of this factor on debt default risk and puts forward relevant suggestions,which is helpful for the government and environmental protection enterprises to improve the management level of PPP.At the same time,this paper also has some shortcomings:first of all,due to the limitation of personal ability and time,it is impossible to talk to enterprise managers to know the details of internal operation and management,and the countermeasures tend to prevent enterprise debt risk;Secondly,because the bankruptcy reorganization of the case company occurred relatively recently and the 2022 annual financial report has not been released,the conclusion drawn in the analysis of the effect of debt repayment in this paper has certain limitations,and long-term observation and analysis are needed in the follow-up. |
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