Research On Risk Control Of Marketized Debt-equity Swap Of Valin Steel

In the process of national economic development,steel industry is an important pillar industry.From the current stable and rapid development point of view,in the middle and late period of industrial development,the domestic demand for steel,steel market share still has a lot of room to improve;However,at present,China’s industrial efficiency has not been significantly improved,and the fundamental factors of its low efficiency are overcapacity,excessive leverage ratio and unreasonable industrial structure.In order to solve the above problems of high corporate debt ratio,the government put forward the market-oriented debt-to-equity swap policy.In 2021,in order to better guard against financial risks and further improve the specific measures of the market-based debt-to-equity conversion system,China Securities Regulatory Commission(CSRC)issued the "Guiding Opinions on Conducting Market-based Debt-to-Equity Conversion Business",stressing that the converting enterprises should always adhere to market-based principles,strengthen information disclosure and risk control,and elaborate closely on the market-based debt-to-equity conversion of state-owned enterprises from various aspects such as the implementation plan of debt-to-equity conversion and financial support.Therefore,many large iron and steel enterprises hope to reduce their asset-liability ratio through market-oriented debt-equity swap,so as to achieve a more long-term and healthy development.Although the market-oriented debt-to-equity swap policy has been further refined and perfected,the "market-oriented" characteristics of debt-to-equity swap itself will easily induce a series of risks.Valin Iron and Steel is the first enterprise to implement market-based debt-to-equity conversion in a local state-owned enterprise.The project is of exemplary significance in promoting market-based debt-to-equity conversion in the country,and to a certain extent,can guide other enterprises in the smooth implementation of market-based debt-to-equity conversion.Taking Valin Steel’s market-oriented debt-to-equity swap as an example,this paper divides it into three stages,namely equity transfer stage,equity governance stage and the equity exclusion stage,according to the timing of market-oriented debt-to-equity swap,comprehensively analyzes the risks in the process of market-oriented debt-to-equity swap and puts forward optimization suggestions on risk management and control in view of the three stages,in order to make up for the deficiencies in the existing literature in this field.Three main research methods are used in this paper,namely literature research,case study analysis and AHP-fuzzy integrated evaluation.First,the paper uses the method of literature research to summarize and sort out the relevant theories about market-based debt-to-equity swaps at home and abroad,in order to have a clear understanding of the current theories and practices,and to lay a certain foundation for the subsequent theoretical analysis.Second,using the case analysis method,this paper introduces the development status of Valin Iron and Steel Company and the implementation model of market-based debt conversion,and makes an in-depth analysis of the possible risks,at the equity transfer stage,the equity governance stage and the equity exit stage,respectively.Third,the AHP-Fuzzy Comprehensive Evaluation Method was applied to analyse the weights of the major as well as minor risk factors for the market-based debt-to-equity conversion of Valin Steel,and finally the overall risk magnitude was derived.Based on the above analysis,this paper explores the risk management strategies of Valin Steel and propose risk management,including: build a systematic pricing mechanism for debt-to-equity conversion,enhance information disclosure to improve the approval rate,introduce diversified investment entities and pay attention to the scientific nature of the valuation of the underlying company;promote governance structure reform,improve profitability and balance the demands of multiple parties;improve equity exit channels and increase the reserve of repurchase funds,etc.