Research On The Motivation And Effect Of Goertek's Issuance Of Exchangeable Bonds

As an innovative corporate bond,exchangeable bonds have many advantages such as small impact on stock price and low financing cost,and provide more convenient and low-cost for non-listed companies,especially those holding large stakes in listed companies.Way of financing.The advantage of exchangeable debts has made it favored by a large number of large shareholders of listed companies.As of September 30,2018,there were 209 exchangeable bonds issued in China's market,with a scale of RMB 238.2 billion,of which 82 were issued in 2017.The issuance scale was RMB 117.9 billion,which exceeded the 161% of the 2016 annual issuance scale.Among the many companies that issue exchangeable bonds,the Gore Group is the first company in China to adopt a combination of exchangeable bonds and convertible bonds.Its distribution model and terms of issuance have certain particularity and typicality.The Goer Group successfully raised 1.2 billion yuan through the issuance of exchangeable bonds,and successfully realized all share swaps during the share swap period.Therefore,this paper wants to analyze the real motives of the Gore Group's issuance of exchangeable bonds,and study the application effect of the combination of exchangeable bonds and convertible bonds on enterprises,hoping to provide reference for other companies to issue exchangeable bonds.This paper adopts the case study method,selects the Gore Group as a case enterprise,and based on the principal-agent theory,the sustainable financing theory and the information asymmetry theory,firstly,through the issuance of the exchangeable background of the Gore Group,the issue terms,The timing of the issue was selected for in-depth analysis.The motivations for the issuance of exchangeable bonds by the Goer Group were as follows:(1)The financing motivation,the high-quality development strategy of the Gore Group needs huge financial support;for the Gore Group,the traditional financing channels are difficult.The financing cost is high.(2)Motivation to reduce holdings,as China's supervision over the reduction of major shareholder behavior becomes more stringent,exchangeable bonds provide a new channel for Gore Group to reduce its holdings;at the same time,compared with the reduction of bulk trading,the exchangeable funds can be obtained.Fast,can effectively reduce the impact on the market.(3)Arbitrage incentives,exchangeable bonds can be combined with various capital instruments to achieve the arbitrage needs of listed companies and their major shareholders.Driven by these drivers,Goer Group successfully issued exchangeable bonds,and through full conversion,effectively achieved the expected results:(1)financing effect,successful low-cost financing,and optimized corporate capital structure.(2)The effect of reducing the holdings,the successful reduction of shares through the complete conversion of shares,and no influence on the control of its major shareholders.(3)Arbitrage effect,through the combination of exchangeable bonds and convertible bonds,the company will take huge profits.Through further analysis,it is found that the most important reason for the Gore Group to issue exchangeable bonds is arbitrage,and the most important reasons for the success of arbitrage are:(1)Goer Group has absolute control over its subsidiary Goer Acoustics Co.,Ltd.Can control the behavior of listed companies.(2)Goer Group used the control right to intervene in the setting of the convertible bonds of listed companies,and arbitrage the layout by setting the timing of the issue and the price of the issue.(3)China lacks sufficient and effective supervision of the disclosure of exchanged debt information,making the Group's arbitrage intentions difficult to be discovered by investors,resulting in the final success of the Goer Group.Therefore,in view of the above arbitrage problem,this paper proposes the following suggestions: Major shareholders should make rational use of exchangeable bonds to promote the development of the company;should further improve the rules of China's exchangeable bonds,reduce the arbitrage space of issuers;and strengthen the information disclosure of exchangeable bonds Risk control,standardizing the exchangeable bond market,making the exchangeable debt develop more smoothly.This study can provide reference for enterprises that may be able to reduce their holdings by exchangeable private placement bonds in the future,provide warnings for small and medium-sized investors,and strengthen supervision over the issuance of exchangeable bonds by enterprises for the relevant regulatory authorities.The behavior of bonds provides a reference.