Research On The Application And Risk Of Privately Placed Bonds In M&A Financing

This case is about a case of snake swallowing mergers and acquisitions.In the case of the merger,the Apexmic and the global printing giant Lexmark,which was acquired by the company,had a 10-fold difference in revenue and a difference of 8 times in asset size.Merger and acquisition party Apexmic played its financial support to its controlling shareholder Seine Technology to issue two private exchangeable bonds to raise a total of 6 billion yuan,and then jointly invested in private equity investment institutions,Shuoda Investment,Taimeng Investment to form a consolidated subsidiary,Apexmic invested the consolidated subsidiary 5.352 billion yuan,Taimeng Investment contributed 4.791 billion yuan,and Shuoda Investment held 613 million yuan.Then,the consortium was used to carry out the syndicated loan and finally completed the acquisition of about 24 billion yuan.The 6 billion funds that were financed by private placements were the inciting funds of the Apexmic mergers and acquisitions.At that time,Apexmic's book capital was about 700 million yuan,but it needed to be used as daily operating funds.It was this 6 billion yuan that had later and privately-owned Private equity investment.Joint acquisitions and syndicated loans.This is the first time that China has applied private exchangeable bonds to M&A financing.Therefore,analyzing the advantages and disadvantages of private exchangeable bonds compared to other financing methods,and studing how to embed exchangeable bonds in the M&A structure and how to optimize private exchangeable bonds.The content of the terms and how to prevent the risks arising from the financing of financing applications is very important.Exchange Bond is replaced by EB in the following text.Due to the particularityof the case,the research in this case also has certain reference significance for the use of private exchangeable bonds in subsequent merger financing.This paper sorts out the diversified financing means of the acquisition of the company's financial intelligence,and analyzes the motivation of the merger and acquisition,and then analyzes the case of the intensive capital of RMB 24 billion in the case of the private equity transfer of RMB 6 billion in the case,mainly through combing The feasibility of various financing methods such as equity financing and bond financing that Apexmic can use to analyze the reasons for choosing private equity financing,and the financing advantages of private exchangeable bonds is the driving force factor in the application of M&A financing.The case study is mainly based on the problem to be solved by the case.The risk of the existence of 16 Seine Technology private EB is analyzed,and the risk of the existing option value and implied capital cost of 16 Seine Technology private EB is used to optimize the terms to find out the best solution to balance the interests of issuers and investors,debt repayment risk and exchange risk,and propose the improvement of the original terms,the coupon rate is changed from4.5% to 4.05%,which is expected to reduced the interest expense of $27 million for the issuer that has certain practical significance.Finally,the potential risks of private exchangeable bonds in M&A financing and how to establish risk prevention mechanisms around risks are analyzed.