Research On The Issuing Motivation And Effect Of Exchangeable Private Placement Bonds

With exchangeable private placement bond widely used in 2015,it plays an increasingly important role in the capital market.On the one hand,using exchangeable private placement bond reduce the financing cost of enterprise and it's a smooth way to reduce holding-shares.On the other hand,the major shareholders of listed companies frequently issue exchangeable private placement bond,which also raises the concern that major shareholders use exchangeable privateequity bonds to infringe minority shareholders.So far,there has been no agreement between the practice and academia on the impact of exchangeable private placement bonds.In this paper,YiTi Group is regarded as an analysis of the case.This paper is based on information asymmetry theory and principal-agent theory.First,the paper describes the process of continuously issuing exchangeable private placement bonds after Yiti Group had transferred the share of ET Medical Technology Co.,Ltd to Zhongzhu Holding Co.,Ltd.Then,this paper analyzes the motivations of two sides in the M&A,equity withdrawal and the issue of two exchangeable private placement bonds after merger.The study found that Zhongzhu Holding acquired ET Medical is in order to promote the strategic transformation of its enterprise.The article analyzes the motivation and impact of the issue of exchangeable private placement bonds from the perspectives of financing and cash withdrawals.The research found that Yiti Group combined the M&A with the exchangeable private placement bonds with the help of Zhongzhu Group and Zhongzhu Holding.The aim of Yiti Group is to get cash in advance and reduce holding-shares at a high price.So Yiti Group locked in 317 million yuan of stock premium income,infringing on the rights and interests of minority shareholders.Finally,in view of the effects and risk in the use of exchangeable private placement bonds,the paper conclude that securities regulator need to control the arbitrage space generated by the combination of M&A and exchangeable bonds,design the specific clauses of the bonds and improve the information disclosure system.