The Pricing Of The Debt-equity Swap And Exit Channel Of

Legally , debt-to-equity swap means the conduit of the debtee converting its legal financial claims into investment to the debtor and increasing registered capitals of the debtor accordingly .It includes two legal processes: annulment of the financial claim and emergence of the equity. As an important economic policy in China, debt-to-equity swap has resulted in a deep discussion, both in the Chinese economic field and the theory field. This dissertation tries to research and discuss the price making and exit passageway of debt-to-equity swap on the basises of experiences and theories of Chinese and foreign countries.Ⅰ,The Price Making of Debt-to-Equity Swap(DES) 1,The scope of application for debt-to-equity swap The "equity" theory of debt-to-equity is applicable to any types of debtors including companies and non-company enterprises. 2,The converting proporation or price of debt-to-equity swap (1)The price making of financial claims being converted from commercial banks to financial asset management companies . The best way to make the price of bad asset is replacement cost method or current exit value method . (2)The price making of financial asset management companies converting financial claim to equity of enterprises. ①Direct Debt-to-Equity Swap The converting proporation or price can be explained by this formula : R=A/B , R represents the converting proporation or price , A represents the amount of the financial claim , B represents the amount of registered capital being converted and increased . ②Indirect Debt-to-Equity SwapIn the indirect transaction , the debtee and debtor set up a new company with joint contribution , so the problem of contribution discount of each party B concerened while the converting price B not . Ⅱ,The Implement of DES and Exit Passageway 1,The implement of DES (1)The financial claim can be converted to common corporate stock (2)The financial claim can be converted to both common corporate stock and preferred stock (3)The financial claim can be converted to convertible bonds (4)The financial claim can be converted to changeable bonds 2,The exit passageway for equity after DES (1)To exit by enterening the capital market ① RepurchaseShare repurchase is the conduct of stock company purchasing its own outstanding capital stock , It provides a new thinking for the resolution of non-negotiable state-owned stock and corporate stock and decreasing problem of secondary market. ②Placement of state-owned corporate stock Placement of state-owned stock is a tranference of part state-owned stock to the former negotiable shareholders or funds management companies , which provide an important method for reducing the amount of state-owned stock holding , improving and optimizing capital structure of listed companies. It is also important for solving the limitation on DES exit and improving the long term efficient operation of DES. ③TransferenceAsset management companies , the enterprises holder after DES ,usually transfers equity to others and holds stock periodically. Under the current market condition , equity-transference often apply ranties of asset realignment method in which entering the market by using a "shew"is the most commonly used one.④ Dividend & bonus and capital accrualDividend & bonus distribution and capital accrual of listed companies are also an important means to exit for both state-owned equity and corporate equity. It conforms to the aim of periodically stock holding of asset management company after DES , and it is fairly equal to state shareholders , corporate shareholders and social investors as well.⑤ Other exit method (2)Exit method without entering the market ①DespositionA difficulity the asset management company confronts with when disposing asset is the scarcity of adequate market. The Reconstruct Trust Company Of U.S. has formed a set of standard process based on bid , which can provide useful ex...