A Study On The Causes And Economic Consequences Of The Issuance Of "17 Goertek EB" Exchangeable Bonds

As one of the relatively new corporate bonds,exchangeable bonds are characterized by lower issuance threshold and lower financing cost,so many non-listed enterprises prefer to use exchangeable bonds in financing acquisition.The statistical results show that as of November 30,2022,China has completed the issuance of 376 exchangeable bonds,involving a total issuance of about 469.865 billion yuan.According to the issuance time,in2017 alone,China completed the issuance of 80 exchangeable bonds,involving a total issuance scale of about 117.284 billion yuan,which is 87% higher than the issuance in2016.Among many enterprises that issue exchangeable bonds,Company G is the one that issues exchangeable bonds earlier and has issued exchangeable bonds many times in China,and after continuous experience precipitation and accumulation,the terms design and issuance mode of Company G are certain particularity and representativeness.Company G raised a total of 2 billion yuan through the issuance of exchangeable bonds,and all the holders chose to exchange shares during the exchange period,and all the bonds were successfully converted into the underlying shares of listed companies.Therefore,this paper wants to analyze the behind-the-scenes motivation of G company to issue exchangeable bonds,and study the economic consequences of issuing exchangeable bonds to related entities,hoping to provide some reference for other enterprises planning to issue exchangeable bonds.Firstly,this paper expounds the related concepts of exchangeable bonds,including the characteristics and functions of exchangeable bonds,and sorts out the development process since the promulgation of the trial provisions of exchangeable bonds in 2008,combining with China’s practical experience to continuously update and improve the reduction system.This paper takes pecking order theory,information asymmetry theory and principal-agent theory as the theoretical basis of case study,and summarizes the existing research results on the issuance motivation,clause design and economic consequences of exchangeable bonds.Taking Company G as a case enterprise,through an in-depth analysis of the background,terms and pricing of issuing exchangeable bonds by Company G,it is found that the motivation of issuing exchangeable bonds by Company G is as follows:(1)Financing motivation,the enterprise needs huge funds to support the realization of its development strategic objectives;However,the traditional financing channels of G Company have the problems of financing difficulty and high cost.(2)Motivation of reducing shareholding.At present,China’s supervision of major shareholders’ reduction behavior is becoming stricter,and exchangeable bonds provide a new channel for major shareholders to reduce shareholding;Compared with other ways of reducing holdings,such as block trading and centralized bidding,exchangeable bond funds have the advantage of fast acquisition and have a direct effect on reducing market impact.Based on the above reasons,Company G issued exchangeable bonds and realized 100% share exchange during the share exchange period,which achieved the expected effect of corporate bond issuance:(1)Financing effect,reducing financing cost and effectively enhancing corporate solvency,and further optimizing capital structure.(2)The effect of shareholding reduction,that is,the shareholding reduction was successfully realized by completing the share exchange during the share exchange period,and the control right of the major shareholder was not affected.Through further analysis,it is found that the most important motivation for G Company to issue exchangeable bonds is to reduce its holdings,and the most successful reason for reducing its holdings lies in the setting of the terms of exchangeable bonds and the pricing of bond issuance.By setting the coupon rate and the timing of issuance,the bonds are successfully converted into shares.Through the study of this case,some suggestions are given to the relevant subjects:(1)using exchangeable bonds to alleviate the financing dilemma;(2)Reasonable design of the terms of issue;(3)Strengthen the supervision of issuing exchangeable bonds.