Case Study On Market-oriented Debt To Equity Swap Of Valin Iron And Steel

On October 10,2016,the State Council issued the opinions on actively and steadily reducing the leverage ratio of enterprises,proposing that the market-oriented debt to equity swap be an important means of "deleveraging" in the supply side structural reform.Market debt to equity swap requires that debt to equity swap follow the principle of "marketization and legalization",emphasizing that the mode,enterprise selection and participating institutions of debt to equity swap should be determined by the market through independent negotiation,so as to fully stimulate the vitality of the capital market,aiming to reduce the financial burden of enterprises that encounter temporary economic difficulties but have good development prospects,help them reduce the asset liability ratio of enterprises,and achieve more long-term and healthy development.This paper takes Hunan Valin Steel Co.,Ltd.(hereinafter referred to as "Valin Iron and Steel")as the case object.Firstly,literature research method is used to sort out and summarize relevant research results of debt-equity swap,providing theoretical basis for subsequent analysis and research.Secondly,the case study method is adopted to summarize the equity structure,operation and financial situation of the company before the debt-to-equity swap,and to sort out the specific process of the market-oriented debt-to-equity swap.On this basis,the motivation and key points for the success of market-oriented debt-equity swap of the company are analyzed,and the following conclusions are drawn: the main factors are policy support,the steel industry needs a large amount of capital,the interests of creditors and investment institutions and other external factors.And the need to remove leverage,optimize capital structure,improve corporate governance,strategic planning and other internal factors to promote market-oriented debt-equity swaps;Valin Steel’s market-oriented debt-to-equity swap can be implemented smoothly from the following aspects:following market-oriented principles,choosing appropriate participants,implementing the "two-step" mode,reasonable pricing and equity exit mode.On this basis,the paper analyzes the influence of market-oriented debt-equity swap,including the influence on financial condition,corporate value,corporate governance and strategy.This article from the taian database is a collection of valin iron and steel industry in 38 companies related index data and index of valin iron and steel 2016-2020 years of history data,by using financial indicators from the vertical comparison and horizontal comparison of two dimensions to evaluate its financial situation,the analysis results show that valin iron and steel shares through the debt market to improve the financial situation;EVA model is used to evaluate and analyze the enterprise value.The results show that Valin Iron and Steel has improved the company value through market debt-equity swap.Qualitative analysis shows that debt-equity swap has a positive impact on corporate governance and strategic layout.Finally,according to the analysis of the full text,some conclusions are drawn and corresponding enlightenment is put forward to provide some references for other enterprises in the steel industry.