Research On Market-oriented Debt-to-equity Conversion Of Company Z

In the critical period of our country’s economic transition,the outstanding impact of the non-financial corporate sector on the leverage of the whole society has aroused great concern from all sectors of society.At this stage,the leverage ratios of many enterprises represented by state-owned enterprises remain high,the scale of debt is expanding,and the financial burden is constantly increasing.At present,from an international perspective,the economic environment is continuously affected by the subprime mortgage crisis since 2008,and the degree of economic globalization is also deepening.From a domestic perspective,China’s economy is in the bottom of the "L" trend and downward pressure.Larger.Some companies cannot keep up with the times,fail to meet demand,and lay a lot of hidden dangers.Correspondingly,debt risks have risen sharply.Especially in the infrastructure industry,due to the high initial investment and long repayment period,the problem of high leverage has always existed.The State Council has made a decision and deployment of“de-capacity,de-stocking,de-leveraging,cost reduction,shortcomings”work,which was launched on October 10,2016.The Opinions on Proactively and Steadily Reducing the Leverage of Enterprises,put forward a new idea of market-oriented debt-to-equity swaps,and gave clear instructions on its overall requirements and main approaches.This article selects Z company,one of the representatives of the infrastructure industry,as the research object of market-oriented debt-to-equity swaps.First,it uses literature research methods to clarify the characteristics,models,drivers,and effects of this round of debt-to-equity swaps,and reviews the last round of policy-based debt-to-equity swaps.Detailed operating rules for in-depth comparisons to better understand market-oriented debt-to-equity swaps.Secondly,the case study method is used to summarize the background of the case.One by one,the case subjects involved in the market-oriented debt-to-equity conversion of Company Z are introduced,and the case process of company Z’s market-oriented debt-to-equity conversion is introduced.Issuing shares to purchase assets,based on the analysis of the implementation process and the implementation effect of the company’s market-oriented debt-to-equity conversion,the following conclusions were obtained: the company Z and its four subsidiaries’ solvency In the short term,it has been effectively improved,and its capital structure has also been adjusted to reduce its own leverage risk.However,it has also exposed problems such as the risk of immediate dilution,a single source of funds,and the size of the group’s liabilities.Finally,in order to better make up for the shortcomings,we have made relevant recommendations for Z Company and the rest of the industries,so that it can learn from experience and lessons in the implementation of market-oriented debt-to-equity swaps,and make market-oriented debt-to-equity swaps more mature and effective specification.