An Study On The Optimization Of Financial Structure Of Mining Investment Group A

During recent years,China's economy goes into the ‘new chapter'.Under the background of the local government financing platform with the severe burden of debt,the high leverage of firms in China is currently the most prominent risk in the economic and financial industry.This not only will affects the firms' long-term development,but also have a great impact on China's economic growth and employment.Especially for state-owned enterprises in mining industry,they should put a large amount of initial capital into constructions and rely on mainly on debt financing such as platform loans from banks or trust companies,which results in a heavy financial burden.In the situation of the contradiction between the demand of high capital and the heavy debt burden,it is important for mining firms to find out a new way of direct financing including asset securitization,which will be helpful for them to revitalize stock assets,to optimize financing structure and develop healthily in the future.Based on the introduction of research background and literature review,this dissertation firstly analyzes the characteristics of operation and financing of a typical mining investment firm.Secondly,we investigate deeply into the situation of asset,liability and cash flows of Group A,which is a state-owned mining firm.Thirdly,combining the macro background of reform and regulations of state-owned firms and the lessons draw from successful experience,the dissertation tries to design a plan for Group A to optimize its financing structure by securitizing account receivables and mining rights of some high-quality projects,by making affiliated firm controlled by Group to go public and by introducing strategic investors to Group itself.By analyzing the characteristics of operation and cash flows of Group A,the dissertation firstly points out the problems of financing structure confronted by Group A: The financing of Group A is mainly from banks and the independent ability of affiliated firms controlled or held by Group A is too weak.Further,focusing on the role of secondary firm C which is a mining investment firm,the dissertation develops a financing optimization plan including following ways.Firstly,in order to obtain long-term capital,Group A should make C2 firm affiliated by firm C to go public on Growth Enterprise Market.Secondly,to improve the liquidity of current assets and ease the interest burden of large stock debt,Group A can securitize the mining rights of C1 and account receivables of C1 and C2.Thirdly,to optimize the ownership structure,Group A can begin to try to strategic investors into Group A itself.The results of this research will not only directly diagnose the situation of Group A,but also provide guidance for other state-owned firms to conduct financing reform.