Research On The Motivation And Economic Consequence Of Guangdong Publishing Group Exchangeable Bonds Issuance

Exchangeable bonds are financial instruments issued by shareholders of listed companies with embedded stock exchange options.They usually have a low coupon rate,which can help companies achieve low-cost financing or smooth reduction of their holdings by encouraging bond holders to exchange shares through terms design.Although exchangeable bonds were introduced late in China’s capital market,they have gradually become one of the important financial instruments for enterprises with the improvement of market supervision system.Studying the specific case of exchangeable bonds is helpful to expand the idea of corporate financing and reducing holdings,which is of positive significance to the development of capital market.At present,most of the case studies of exchangeable bonds focus on their function of reducing holdings or combining with other financial instruments for arbitrage,this thesis focuses on the financing function of exchangeable bonds.After a major asset restructuring in 2019,Guangdong Publishing Group has gradually started the road of diversified development.The original financing mode of relying on bank loans cannot meet the needs of development.The issuance of exchangeable bonds for financing in2020 is a positive attempt to effectively use the stock assets for innovative financing.From the perspective of business model and capital demand,this thesis analyzes the motivation of the issuer to optimize the debt structure and supplement the working capital through exchangeable bonds,and summarizes how to rationally use the issuance timing and clause setting to achieve the issuance target.Then,combined with the development status and strategy of the enterprise,the economic effect of exchangeable bond issuance is comprehensively analyzed.The results show that by issuing exchangeable bonds,Guangdong Publishing Group improves the financing system,reduces the comprehensive financing cost,and effectively improves the adaptation degree of capital introduction structure,debt structure and cash flow to the enterprise development strategy.Although it increased the debt burden of Guangdong Publishing Group to a certain extent,it also effectively used the positive role of financial leverage to help the enterprise achieve rapid development.On the other hand,the exchangeable bond issue has a short-term negative impact on the stock price of the underlying company,which in turn affects the wealth of the shareholders of Guangdong Publishing Group.Finally,through the case study and summary,we find that for the shareholders of listed companies with limited financing channels,issuing exchangeable bonds at the right time can help them effectively revitalize their existing assets,broaden financing channels,and achieve low-cost financing.Then optimize the company’s capital structure and debt structure,to provide sufficient cash flow for the development of the enterprise.Reasonable bond issuance timing and flexible clause setting can ensure the successful issuance of bonds and achieve the purpose of issuance,and minimize the risk of bond issuance.Through this case study,we hope to provide reference experience for the shareholders of listed companies in innovative financing,and enrich the practical research cases of exchangeable bonds in China.