Case Analysis Of Debt To Equity Swap In Qinghai Salt Lake Industry Co.Ltd

Debt to equity swap is an important way to reduce enterprise leverage.In order to reduce the leverage ratio of enterprises and prevent financial risks,the State Council issued the Opinions of the State Council on Actively and Steadily Reducing the Leverage Ratio of Enterprises in September 2016.This round of debt to equity swap was carried out according to the three principles of marketization,rule of law and specialization,promoting the survival of the fittest,adjusting the market structure,providing a "rebirth" opportunity for enterprises facing financial crisis,helping them to recover their business ability,thus safeguarding the legitimate rights and interests of the relevant parties,and in the long run,providing a shot in the arm for stabilizing social development.In recent years,some large state-owned enterprises in China have temporarily fallen into bankruptcy crisis due to operational difficulties.Salt Lake Shares is a typical example of this.From 2017 to2019,they suffered losses in succession.Only in 2019,the losses reached as much as 45.86 billion yuan,setting a historical record of losses for A-share listed companies.On August 2,2017,Salt Lake Corporation organized relevant parties to discuss the debt restructuring,market-oriented debt to equity swap and other plans of Salt Lake Corporation with part of its assets,and the bankruptcy restructuring plan was completed on April 20,2020.In 2020,Salt Lake will achieve a net profit of 2.040 billion yuan attributable to the parent company,and in 2021,it will achieve a net profit of 4.478 billion yuan attributable to the parent company.It will double its revenue for two consecutive years,and its financial situation will be significantly improved.This paper analyzes the case of debt to equity swap in order to provide reference and ideas for more enterprises that need debt to equity swap.This paper is divided into five parts to elaborate and analyze the research issues in detail.First,the first part mainly completes the preliminary work of the research,introduces the background and significance of the topic from the relevant policies,market and enterprise background,combs the existing literature,and clarifies the research content and methods.The second part defines the concept of debt to equity swap from relevant legal documents and policies,expounds the theoretical basis,and draws the flow chart of the operation mode of debt to equity swap.The third part introduces and analyzes the basic situation of the enterprise in this case,the implementation process of debt to equity swap,and the debt to equity swap scheme.The fourth part is the case study of debt equity swap in Salt Lake.First,it analyzes the necessity and feasibility of debt equity swap,and then analyzes the impact on governance structure from equity change and board structure;Analyze the management ability from the perspective of financing structure and financing cost;This paper analyzes the impact of debt equity swap on Salt Lake shares from the aspects of financial performance,enterprise value and risk.The fifth part is the conclusion and enlightenment of the debt equity swap project.Finally,on the basis of a case study of debt to equity swap in the Salt Lake Stock Market,the paper summarizes the enlightenment for other enterprises to carry out debt to equity swap.On the one hand,enterprises should pay attention to internal governance,conduct debt to equity swap in a multi-dimensional manner,and choose the debt to equity swap model according to the specific environment of the enterprise.In addition,post investment management and external risk control should not be relaxed.On the other hand,the government should also continue to improve relevant laws and policies,guide the participation of external funds,strengthen market supervision,create a more convenient environment for enterprises to convert debt into equity,increase the number of successful cases of debt to equity,continue to promote the reform of enterprise debt to equity,effectively solve the problem of high leverage ratio of enterprises,and inject impetus into China’s economic development.