The Discussion On Financing Strategy Of Warrant Bonds In Changhong Electric Co., Ltd.

In 2005-2008,Changhong Electric Co.,Ltd.did not meet the requirements of public offering.As a result,the funds that support the company's operations are mainly from commercial credit and short-term loan,which makes it difficult to achieve long-term financing support for growth strategies.In order to achieve the company's growth strategy and gain a competitive advantage,the company urgently needs a lot of capital investment in equipment investment,R&D,M&A,channel construction,supplementary liquidity and repayment of bank loans.For the sake of achieve the development strategic objectives,the company needs,first of all,solve the problem of financing constraints.If continuing takes the road of large-scale debt financing,it will bring pressures as follows.Firstly,large debt financing interest costs will significantly reduce the profitability of the already lower profit margins.Secondary,it may causes financial liquidity pressure,as the debt and interest repayment to form a large amount of cash payment obligations.Based on the above considerations,this paper uses the method of theoretical analysis and case analysis to do research.It introduces the concept of corporate financing and the concept of warrant bonds.This paper chooses the case of Changhong Electric Co.,Ltd.warrant bonds,analyzes the financial situation of the case company and the financing demand,summarizes the reasons why the case company distributes the warrant bonds,and then analysis the economic consequences.From the analysis of Changhong Electric Co.,Ltd.case,the paper draws the following conclusions:(1)The financing decision is subject to the restriction of financing scale,financing cost and financial liquidity;(2)The balance of warrant bonds can balance financial liquidity and financing costs;(3)The issuance of warrant bonds to reduce the financial risk and reduce the cost of capital.On this basis,the paper proposed three recommendations:(1)Relevant policies and regulations to be improved;(2)It needs encourage high quality companies to issue warrant bonds;(3)Promote the development of stock market and the warrants market and financial innovation.Thesis consists of five chapters.The first chapter is the introduction to this article,which introduces the background and significance,literature review,research ideas,methods and basic framework as well.The second chapter is the theory overview of the thesis,it mainly introduces the theory of financing theory and the theory of warrant bonds,which lays the theoretical foundation for the analysis of this paper.The third chapter is the case description of Changhong Electric Co.,Ltd.The case description section mainly introduced the company basic situation,It mainly introduces the basic situation of the case company,the financing demand situation and the background of the background of the warrant bonds.The fourth chapter is the case analysis section,The section analyses Changhong Electric Co.,Ltd.including the evaluation of the warrant bonds financing constraint background,strategic motivation and effect after the release of the case company.The last chapter of the study is the conclusions and policy recommendations.