Research On The Implementation Plan And Effect Of Valin Steel Market-oriented Debt-for-equity Swaps

Market-oriented debt-to-equity swaps are a powerful means to promote deleveraging of enterprises and prevent and control debt risks.They can reduce total liabilities of enterprises,reduce losses of creditors,and help enterprises improve corporate governance structure and enhance development potential.Since 2014,China’s economy has entered a new normal.The overall leverage ratio of state-owned industrial enterprises is high,and the steel industry has fallen into the operating dilemma of excess capacity,high leverage and small profit.As a local state-owned iron enterprise,Valin Steel has a rapidly rising asset-liability ratio and an increasingly heavy financial burden.It is in urgent need of deleveraging to optimize the asset quality of the enterprise.In order to achieve high-quality development of its main business,Valin Steel has decided to implement market-oriented debt-equity swap.Therefore,based on the background of China’s supply-side structural reform,Valin Steel is selected as the specific object of study to study the implementation plan of market-oriented debt-equity swap,analyze the implementation effects,discuss the challenges,and put forward enlightenment and suggestions.First of all,by collecting and sorting out relevant literature,this thesis has formed a scientific understanding of market-oriented debt-equity swaps and laid a theoretical foundation for this thesis.Secondly,this thesis introduces the basic information of all parties involved in the market-oriented debt-to-equity swap of Valin Steel,and expounds the motivation of the market-oriented debt-equity swap from two dimensions of industry and enterprise.Then,based on the overall implementation plan of Valin Steel’s market-oriented debt-equity swap,this thesis interprets and analyzes the implementation agency,pricing mechanism,operation mode and exit mechanism.Then,this thesis focuses on the comparative analysis of the market reaction,financial performance and non-financial performance of Valin Steel before and after the market-oriented debt-to-equity swap,and discusses the main challenges facing the implementation of debt-to-equity swap.Finally,based on the overall evaluation of Valin Steel’s market-oriented debt-equity swap and the existing shortcomings,this thesis puts forward the corresponding enlightenment and suggestions.Through in this thesis,the study found that the implementation of Valin Steel market debt turn to their own development has a certain positive effect,asset-liability ratio significantly reduced,profit ability and improve the corporate governance structure,enterprise value have got improved,markedly improved the risk resistance ability of the company,the high quality steel assets injection also inspired their competitive vitality.Although market-oriented debt-to-equity swaps also face challenges such as low participation of implementing agencies in nature,dilution of earnings per share of the company,and lack of debt constraints,the shortcomings do not cover up the advantages.The implementation of debt-to-equity swaps is still a proper choice to solve the company’s difficulties at that time,providing good inspiration and ideas for other local state-owned enterprises to open market-oriented debt-to-equity swaps.In order to make market-oriented debt-to-equity swaps long-term,the government and transaction subjects need to work hard on corporate governance,shareholder rights and interests protection,debt risk prevention and control and innovation of market-oriented debt-to-equity swaps,which is also the due meaning of supply-side structural reform.