Font Size: a A A

A Legal Study On Equity Withdrawn In Debt-Equity Swaps Of AMC's

Posted on:2007-08-03Degree:MasterType:Thesis
Country:ChinaCandidate:Y LiuFull Text:PDF
GTID:2166360218962335Subject:Law
Abstract/Summary:PDF Full Text Request
Debt-equity swaps policy is an important strategy that our government has employed to solve the malign loans of state-run commercial banks and promote the reformation of state-owned enterprises at the end of 20 century. It has been widely implemented in our country. The assets management corporation, AMC swaps debts owned by state-run commercialized banks with the equity of the debtor enterprise. The AMC will manage the swapped equity to compensate for the enterprise administration, change the mechanism of the administration, and improve potential development of the enterprise. Thereafter, the AMC will withdraw the equity. This is a strategy stipulated according to the reality of our country referring to the experiences of other countries. It is of significant importance for our government to prevent and resolve financial risks. It has special meaning in practice. The complete processes of debt-equity swaps include debt-to-debt, pure debt-to-equity, and equity withdrawn steps. It is not the goal for the AMC to own the equity of the debt-equity swapped enterprises via the first two steps. This will neither help to realize the stipulated goal of the government. The step of equity-withdrawn is not only necessary, but also important for the goals of debt-equity swaps policy. The investigation of equity-withdrawn has both theoretical and practical significance.This dissertation is divided into four chapters. The first chapter is a general description of equity withdrawn in debt-equity swaps of AMC's. First, the concept of debt-equity swaps is introduced. Second, the background and goals of debt-equity swaps policy are further illustrated. Third, the necessity of equity-withdrawn is analyzed associated with the reality. Finally, several means of equity-withdrawn are discussed. The second chapter is on the investigation of AMC equity transfer problem. Together with the case analysis of Huarong AMC of China, the criteria and difficulties in the process of equity transfer, and the option to purchase of stockowners of the limited corporations are analyzed. Thereafter, practical operational methods are suggested. The third chapter is on the studies of AMC repurchase problem. The rationalization, procedure, and difficulties of equity repurchase are analyzed. In the forth chapter, various legal approaches for AMC equity-withdrawn are discussed. The approaches of purchase on the administration level and attracting qualified investors are introduced. At the end of this dissertation, the prospect of equity-withdrawn is blueprinted together with the tendency of AMC development.The author believes, the policy of debt-equity swaps is an opportunity for the reformation of the state-owned enterprises. Pure debt-equity swaps attempt to make enterprises profit by reducing their debts. However, the problem of low efficiency cannot be completely resolved in this way. This way of turning debt interests directly into profits is not the real goal of debt-equity swaps policy. The AMC is not a qualified investor because of the limitation of policies and its own characters. Holding of equity by AMC's cannot compensate for the management of debt-equity swapped corporations, and make them change administration mechanism. It is necessary for AMC's to withdrawn their equity. Equity transfer and repurchase are the two most common means to withdrawn equity. Equity repurchase has the advantages of less influence and easy operating, but it is easy to trap into the situation of exclusively dominant equity by the state as in the past. In contrast, equity transfer approach is more helpful to promote the establishment of modern administration system in state-owned enterprises. Meanwhile, it can reduce the risks of over-concentration of capitals, although there are some difficulties during its implementation.The author has worked for 5 years in an AMC. Together with personal experience in the work, the step of equity-withdrawn is investigated based on real case analysis. I hope the research will somehow contribute to the studies of challenge of equity-withdrawn problem in the debt-equity swaps policy.
Keywords/Search Tags:debt-equity swaps, equity withdrawn, equity transfer, equity repurchase
PDF Full Text Request
Related items