Research About Behaviors Of Convertible Bond Financing Of Zh Co.,Ltd

Convertible bond refers to a hybrid financial instrument in modern enterprises,because it has a variety of properties,like debt,equity and options.Since it had been adopted for the first time in 1843,convertible bond has got rapidly developed and widely used.After 172 years of development,convertible bond is getting more rich in types and functions.In 2013,the total amount of global convertible bond issued are$ 108.5 billion.Therefore,it plays an important role not only in the western developed financing market countries but also in promoting the development of capital markets of Western developed countries.In the early 1990 s,the convertible bond was first introduced to China in a new way of financing and began to be applied by Chinese enterprises.With respect to the developed countries that has longer usage time and rich experience in convertible bonds,China shows such characteristics,relatively short-time application,small issue scale,narrow application industry,etc.Convertible bond has unique advantages compared to equity financing and debt financing.It has influence on enterprise capital structure and other aspects.Research about the motive and consequences of the convertible bond is helpful for enterprises to make right choice to financing.This paper describes the background and significance of convertible bond,and reviews the international and domestic scholars researches on convertible bonds,then introduces the concepts and theories of convertible bond financing.Combined with the ZH Company's convertible bond financing case,this paper analyzes ZH Company's motive,issue scale,issue terms,conversion behaviors and its consequences.In the respect of motive,ZH Company has reduced the capital cost and obtained a long-term stable funding by making full use of tax shield effect of convertible bond.In terms of the issue size and terms,this paper presents a detailed analysis of ZH Company's issued size,interest rate,conversion time and redemption terms.As to the conversion behavior,the company's convertible debt time,its reasons and scale of early redemption of convertible bond and convertible amplitude have been comprehensively analyzed.More than 90% convertible bonds had been successfully converted into ZH Company's a-shares.Meanwhile,this paper also describes several adjustments of ZH Company's conversion price in the conversion process.As to the impact of convertible bond financing,this paper analyzes the influence on ZH Company's capital structure and the stock price.Convertible bondsfinancing can improve the capital structure proportion.During the six-year conversion period,the stock dilution has been effectively relieved.By analyzing the issue,the issue that the enterprise announced convertible bond financing program may cause fluctuations in the stock price.It's successful because that ZH Company has achieved capital with lower capital cost,and optimized he capital structure.Finally,this paper analyzes the motive and consequences of the convertible bond financing scheme of ZH Company,and raised several experience and key points.By convertible bond financing,enterprises can get long-term stable capital supply and avoid rapid expansion of capital stock in the short term.At the same time,risks posed by convertible bond financing need to be alert.Firm value can be improved by exert encouragement of convertible bond financing in company's management.Besides,supervision department should strengthen information disclosure supervision of the convertible bond financing to protect investors' benefits in the hope of helping enterprises in China to successfully issue convertible bond.