The Case Analysis On Financing Of Non-public Exchangeable Bonds Issued By Zhengbang Group

With the continuous advancement of agricultural modernization in China,many agricultural enterprises are faced with huge financing needs,but the industry characteristics of agriculture make it difficult for agricultural enterprises to obtain financing,and the traditional financing channels have their own limitations,but exchangeable bonds by combining with the characteristics of the debt and stock provides an innovative way of financing for the majority of enterprises especially unlisted company.The development of exchangeable bonds in China started relatively late.Initially,in order to solve the problem of unlocking restricted shares which caused by the reform of non-tradable shares,the Fuxing group issued the first non-public exchangeable bond formally in the year of 2013.Since then,Chinese exchangeable bond market has developed and improved gradually.After 2015,the issuance and the offering size of exchangeable bonds in China had risen rapidly.At the end of 2019 China had issued 280 exchangeable bonds,and the number is still increasing,which fully demonstrates exchangeable bonds are more and more approved by the market,and it will have broad development prospects in the future.As a large unlisted company in Chinese agricultural industry,Zhengbang group issued 760 million yuan of non-public exchangeable bonds successfully in 2015 to achieve low-cost financing and reduce its stake.It was one of the few cases that delisted because of completing conversion into capital stock,so it has strong representativeness and research significance.In addition,it can provide reference for the financing of agricultural enterprises with high risk and difficulty in financing.After reading a lot of relevant documents,to begin with the characteristics of exchangeable bonds and domestic situation,this paper summarized and introduced the capital structure,operating profit and financing structure of the Zhengbang group,and backtracked the whole process and terms of this exchangeable bond.Based on relevant theories,this article analyzed the motivation of this issuance from the following three levels:the operating situation of the enterprise,the choosing of the ways financing methods and the comparison of financing cost between different options.Afterwards this paper analyzed the issuing strategy of Zhengbang group from the perspectives of issuing time,issuing interest rate and maturity,and then went to study a series offinancial effects and stock reduction effect to the company,Then,the essay comes to conclusions as follows: The issuance of exchangeable bonds has brought positive effects to Zhengbang group that mainly include the optimization of capital structure,the enhancement of profitability and debt paying ability.Except that the financing channels of the enterprise have been enriched,the financing costs have been reduced too,and kept the effective control unchanged while reducing its share smoothly.By means of analyzing the influence of this non-public exchangeable bonds on Zhengbang group,this essay also gets some enlightenments.First of all,the non-public exchangeable bond with lower requirements to the issuer can reduce financing cost and expand the financing channels of unlisted company,so the agricultural enterprises and the unlisted company who hold any a-share of a listed company legally should be encouraged to issue non-public exchangeable bonds to finance.And on this basis they should choose the right target stock and the favorable occasion to make sure they can realize their intention of financing or underweight their shares smoothly.And issuers who want to reduce their holdings should set a lower swap price and coupon rate to attract investors to swap shares.In addition,we also should provide the access to the knowledge of exchangeable bond to market participants so that the application of exchangeable bond would be expanded and deepened continuously and the development of exchangeable bond market would be accelerated.