Research On Debt To Equity Swap Scheme Of Shaanxi Coal Chemical Industry Group Co.,Ltd

The problem of high leverage ratio of Chinese enterprises has existed for a long time.In 2015,China’s total social debt ratio was 248.5%,of which 127.8%was for the enterprise sector.Paying attention to the debt problem and solving the debt problem has become the social focus for a while.In October 2016,the "opinions of the State Council on actively and steadily reducing the leverage ratio of enterprises" was issued,which formally introduced the market-oriented debt to equity swap as an important means to reduce the high leverage of enterprises.At present,China is in the period of transforming the mode of economic development,adjusting the structure of economic development,and transforming the kinetic energy of economic development.In 2020,under the double influence of the century old epidemic and the century old change,the State encourages all kinds of financial enterprises to help resume work and production,provide good financial services,and continue to make profits to all walks of life,especially the real economy.However,this also makes the loan risk continue to increase,The leverage ratio of China’s real economy reached 270.1%.In this context,debt to equity swap as an effective deleveraging financial tool has attracted more and more attention.In addition to effectively reducing the leverage ratio,eliminating the non-performing loans of financial institutions and preventing the occurrence of financial risks in a forward-looking manner,promoting the market-oriented debt to equity swap can also enrich the financing methods,which is conducive to further promoting the improvement of China’s financial market.Therefore,this paper takes Shaanxi coal chemical industry group as the research object,and takes its market-oriented debt to equity swap scheme as the research content,hoping to summarize the relevant experience and difficulties,and open up ideas for a more perfect market-oriented debt to equity swap scheme.In this paper,the first case in China is Shaanxi Financial Asset Management Co.,Ltd.(hereinafter referred to as Shaanxi JINZI),which is a local asset management company,and Shaanxi coal chemical group(hereinafter referred to as Shaanxi coal chemical)debt to equity swap scheme,which is cooperated by Xi’an Branch of Bank of Beijing,a city commercial bank.This paper first introduces the basic knowledge of debt to equity swap,classifies the typical practices of debt to equity swap in foreign countries,and compares the differences between the two rounds of debt to equity swap in China.Secondly,combined with the occurrence time of the case of debt to equity swap of Shaanxi coal chemical company,it introduces the situation of each participant,and analyzes the motivation of debt to equity swap of Shaanxi coal chemical company from PEST method and micro level of Shaanxi coal chemical company.Next,the paper introduces the operation process,pricing mechanism and exit mechanism of the debt to equity swap scheme,as well as the difficulties and pain points in the implementation process.Case analysis focuses on the use of financial ratio analysis to analyze the impact of the debt to equity swap on some of the representative financial indicators of Shaanxi Coal Chemical Co.,Ltd.,followed by the introduction of DuPont analysis method for comprehensive analysis,and analyzes the reasons why the debt to equity swap case of Shaanxi Coal Chemical Co.,Ltd.has achieved phased success.This paper draws the following conclusions:(1)the debt to equity swap improves the profitability of Shaanxi coal chemical group,optimizes the solvency,effectively reduces the leverage ratio,improves the overall level of operating capacity,and achieves the goal of making the enterprise lighter,which is conducive to the long-term development of the enterprise;(2)the effective promotion of market-oriented debt to equity swap requires the joint efforts of all parties.Finally,combined with the case,in order to better promote the market-oriented debt to equity swap,this paper puts forward some suggestions:banks and other financial institutions should improve equity management,enterprises should improve governance,and the government should optimize supporting measures.