Capital Markets And The State-owned Debt Restructuring

Along with the development of the national market economy,the stateowned enterprises are confronted with dilemma. Statistics indicated that the average debt-asset ratio of State-owned enterprises had soared from 18.7 percent in 1980 to 67.5 percent in 1993. In spite of the government's efforts to write off State firms' bad loans and increase their capital funds, that high ratio remained in recent years. The heavy burden of paying capital and interest has aggravated enterprises' shortage of working capital and pushed some of them to the verge of bankruptcy. Because their debt and financial structures are irrational, they must reorganize debt.The thesis indicate the imminency and the necessity of debt reorganization,deals with the meanings of debt reorganization,consider that the capital market is the main route of the implementation of debt reorganization.Currently,the capital market is faced with expand opportunity.The stateowned enterprises should make use of the good chance and reorganize debt positivly to resume substantial growth.On the other hand,we must made account of some problems,prevent the stateowned assets from lossing. The thesis is divided into five parts. With abundant numerical data,part one shows the current situation of over-debts and serious losses held by the stateowned enterprises. Part two defines the debt reorganization.Compare with other formulas of reorganization,the debt reorganization has its own characteristic.It is a compromise of debtee and debtor to avoid bankruptcy or liquidation,and it has four modes.Next,part two analyzes the objects and the basic thoughts of the implementation of debt reorganization. Part three is the core of the dissertation,which deals with the important role of the capital market in debt reorganization of the stateowned enterprises.And the author lists ten modes of the implementation of debt reorganization in the capital market: (1)Stock reconstruction; (2)Shares listing; (3)Merge; (4)Acquisition; (5)Combination; (6)Vendition of the stateowned enterprises; (7)Bankruptcy; (8)Issuance of the transform debenture; (9)Establishment of the debtreorganization funds; (10)Debt-to-equity swap. Part four analyzes the current situation and the problems of debt reorganization of the stateowned enterprises in the capital market.Now its emphases are the listing corporation debt reorganization and the debt-to-equity swap.Plenty of cases show that many listing corporations pay a debt with its assets.And the asset management company plays a leading role in the debt-to-equity swap programme. In the listing corporation debt reorganization,the existent problems are: (1)Lacking in modes; (2)The publishing of information is not accorded with standard; (3)Fewer listing corporations reorganize their debts passively. In debt-to-equity swap,the focuses are: (1)The core problem is to avoid moral risk; (2)The external conditions need to be perfect; (3)The debt-to-equity swap is not a panacea. Part five is the epilogue of the thesis: (1)Develop the investment banks and the investment funds; (2)Develop the medium-term and long-trem corporation-bond market; (3)Improve the action of mergers and acquisitions; (4)Strengthen the reconstruction of the legal system of the capital market; (5)Establish justic evaluation organs; (6)Establish and develope intermediary organs.