Case Study On Assets Reorganization Of Valin Steel Co.,Ltd.

With China's economic development entering the "new normal",and the introduction of policies such as economic restructuring,deepening reform of state-owned enterprises,resources allocation optimization and "three go,one down,one fill",assets reorganization has become a means for enterprises to seek long-term development.At the same time,the development of iron and steel industry has entered a recession which is increasingly severe,thus the industrial structure needs to be adjusted.Under this background,Valin Steel,as the only iron and steel enterprise in Hunan Province which is large-scaled and listed,has experienced continuing decline in business performance and has suffered losses for two consecutive years since 2015,facing the risk of being delisted.In order to get rid of the present financial difficulties,and actively promote the policies of the Central Committee like supply side structural reform and rational allocation of state-owned assets,Valin Steel has made decision to implement the reorganization of assets.By analyzing of the case of Valin Steel's assets reorganization which include the study on how to choose target enterprises to be reorganized,make reasonable pricing,make options on consideration payment and explicit the reorganization demands,this paper is supposed to have positive reference significance for the improvement of assets reorganization of other iron and steel enterprises.This paper is divided into five parts: the first part is the introduction,including research background and significance,research methods and content,research status at home and abroad and the innovation of the paper;the second part talks about relevant theories on assets reorganization,among which the connotations of assets,assets reorganization and major assets reorganization,operation mode of assets reorganization and the incentive of assets reorganization are mainly elaborated,the third part is the case overview which firstly introduces the background for the assets reorganization of Valin Steel,secondly describes respectively the basic situation of the reorganizing party Valin Steel and to-be-reorganized parties including three companies named Valin Group,Caixin Financial,Shenzhen Runze;then the paper briefly describes the plan for the assets reorganization;finally elaborates the assets reorganization result of Valin Steel;the fourth part is the case analysis,on the basis of relevant theories on assets reorganization,this paper has conducted in-depth study on the case of Valin Steel's reorganizing of Valin Group,Caixin Financial and Shenzhen Runze.This part first analyzes the reorganization demand of Valin Steel from the perspective of itself and gets to know that its biggest need is to get rid of its present financial difficulties;next analyzes that how Valin Steel chooses the type of reorganization and target companies to be reorganized and further studies whether the reorganization of Valin Steel will generate an expected effect combined with the demand analysis.As a result,the research shows that the reorganization can not produce corresponding effects in operating and management coordination for the reorganization in this case is a mixed one,but financial coordination effect has been achieved due to the differences of tax policies between the two sides involved in the reorganization;then the paper gives an analysis of assets reorganization plan of Valin Steel from two aspects namely the assets pricing rationality and consideration payment and the study shows that Valin Steel has taken its own operation state into consideration and has made rational evaluation of its put out assets,which finally urged Valin Steel to choose a mixed means to pay the assets;lastly judgment of the reorganization has been made in accordance with the market reaction.The last part of this paper offers the case inspiration and suggestions which include three points,that is,excessive intervention of government is the big obstacle in the reorganization of state-owned enterprises;the correct understanding of those reorganizing enterprises is the main prerequisite of implementing the reorganization;and the accurate selection of enterprises to be reorganized is the key to the success of the reorganization.Lastly,based on the analysis of the case,five pieces of advice has been given for other enterprises who pursue assets reorganization,that is,firstly,redefine governmental functions;secondly,make clear industry characteristics of their own sectors;thirdly,choose target enterprises reasonably;fourthly,hold a correct view of assets reorganization aiming at safeguarding the “shell”;fifthly,strengthen the supervision and management over the capital market.