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On the debt to equity reasons and ways

Author: ChenZhiBin From: www.yourpaper.net Posted: 2009-03-30 04:51:41 Read:
[Abstract] In this paper, the analysis of enterprise causes and effects of high debt, discusses significance and inadequate debt to equity, to explore the way out of the financial asset management company equity.
Large liabilities of state-owned enterprises not only affect their own development, but also caused a large number of bank assets precipitation, latent risk factors lead to financial risk. To this end, the theoretical and practical circles that debt to equity, which we explored.
The so-called debt to equity in state-owned commercial banks to set up financial assets management companies as a principal investor, the original bad credit assets of commercial banks into the financial asset management companies on corporate equity and the National Development Bank of the enterprise's equity. This is not a corporate debt into a state capital, is not "loan diverted more than corporate debt written off, but the original debt relationship between banks and enterprises into the financial asset management companies and the National Development Bank Ownership and shareholding or holding is holding relationship between enterprises, from debt service into Angufenhong.
First, the significance of the hazards of high debt and debt-equity swap
Carrying a heavy debt burden of state-owned enterprises to enter the market, and is especially very difficult to face the ups and downs of the market. The statistics listed companies in Shanghai and Shenzhen, the asset-liability ratio of more than 102 more than 65% of the company, including asset-liability ratio in 65-80% of the 81 asset-liability ratio in 80-100% 17 PT Yu eliminated Bai, ST Baiyunshan, PT agricultural trading four asset-liability ratio of more than 100%. ST and PT companies accounted for the vast majority of companies with high gearing ratio.
The excessive liabilities least has the following hazards: affect operating results, the erosion of the corporate net profit, increase the risk of corporate finance, part of the old businesses or even annual production profit is not enough to help meet the interest on the debt that year. Chongqing eliminating the white is a more typical example. The end of 1998, the company's debt had reached 1.2 billion yuan, the enterprise sales booming, but the output value of over two billion quarterly profit gained even difficult to pay off the interest, not to mention the principal [Note]; lead to the improvement of the bank's bad debt rate, easy to form a financial risk. Shift constitutes a double obstacle to commercial banks in the real sense of these non-performing assets of state-owned specialized banks, three high debt ratio are often the biggest obstacle to enterprise asset restructuring, the enterprise intends to carry out the reorganization of assets will be prohibitive.
Through debt-equity swap can be better to eliminate the the above adverse impact of the state, enterprises, banks, financial asset management companies, debt has far-reaching significance:
For state-owned enterprises, debt-for-equity conversions, and help to optimize the structure of corporate assets and reduce asset-liability ratio, reduce financial risk. Corporate debt-equity swap conditions, heavy advantage of this golden opportunity.
Second, it helps enterprises to reduce interest expense, lower costs, so as to enhance the level of profit, to achieve industrial upgrading, increased state tax revenues for large and medium-sized enterprises. Key projects, to facilitate early production and deliver results. For example, debt-for-equity conversions of listed companies, the earnings per share in many enterprises will be changed greatly.
Can promote the enterprises to change their operational mechanism, to speed up the establishment of a modern enterprise system, financial asset management company holdings, to help enterprises moderate decentralization, establish effective scientific decision-making and oversight mechanisms within the enterprise, improve the corporate governance structure, enhance the competitiveness of enterprises. For banks, the smooth implementation of the debt-equity swap, you can make an inventory of non-performing assets of the commercial banks to speed up the recovery of non-performing loans, guard against and defuse financial risks to the healthy development of the financial market as a whole, it is bound to the stable development of the securities market positive impact.
In China, a large part of the non-performing loans of the state-owned commercial banks is reflected in the non-performing assets of state-owned large and medium-sized enterprises, asset management companies to dispose of bad credit assets of commercial banks and state-owned enterprises of non-performing assets disposal, to a large extent can be said to solve The two aspects of the same problem. Therefore, the asset management company of those debt burden heavier, but still market prospects and potential capital of state-owned enterprises to implement the debt-equity swap, undoubtedly make an inventory of non-performing assets, procure assets to flow as soon as possible, to minimize the loss of a row effective means effective measures more closely tied to the actual situation in China.
Debt-equity swap to create favorable conditions for the second take-off of the enterprise, but because of the asset management company stressed "phased holdings, and highly dependent on bank debt due to the state-owned enterprises on the financial loan and thus the formation of high debt ratio from the claims start actually address the mechanism of state-owned enterprises, the establishment of the Asset Management Company is the first step. Guiding ideology not solve the deep-seated problems of the enterprise, it is likely to backfire. Swap of Debt must work hard to change their operational mechanism, the debt to equity is not of spirits. If the business does not fundamentally change the existing operational mechanisms, does not establish the true sense of the modern corporate governance structure, the debt-equity swap will become a numbers game. Temporarily books look good, but long term, it is still hard to get rid of the low competitiveness of products, effective landslide loss exacerbated quagmire fundamentally, into eating finance (charges) to eat the bank (loan), eating After the bank to eat the vicious circle of investors. The debt-equity swap is only a transfer of risk from the bank to a financial asset management company itself does not resolve the existing risk and risk into effective work mainly by financial asset management companies to complete. Management company must be a standard modern corporate governance structure implanted enterprises urged to strengthen and improve management, or targeted to provide investment banking services, thereby increasing their holdings of corporate profitability and solvency of enterprises, encourage enterprises virtuous The circulation path of development. Second, the debt to equity means
How to change the plight of the state-owned enterprises, equity swap, equity transfer all the rage in the form of the second year of the state-owned three-year battle has become the drug is not symptomatic, the majority of state-owned enterprises in terms of the proposed debt-equity swap is to solve this problem mentioning out. Theoretically has a reasonable, it belongs to a debt restructuring. But the specific operation is not a simple matter, and way more, each with its own pros and cons.
How debt to equity, many of the specific operation of the program can be designed, but I think each method only in line with the actual conditions of our country be considered a good way to country founded Cinda, Huarong, Great Wall and Orient few financial asset management companies, and as a principal investor, through the acquisition of state-owned commercial bank's non-performing credit assets, debt-for-equity conversions. Here we do some of the discussions in this regard.
Completely insolvent company claims all converted to equity, and issuing new shares at a premium of tradable shareholders to creditors for compensation. Creditors all of their debt into equity, the equivalent of the net assets of the company is fully funded by the creditors to form. The theoretically company shall become a wholly owned subsidiary of the creditor. Listed companies, the original non-tradable shares can replace all for creditors, but the outstanding shares of all creditors can not be a special reason. Therefore, the debt-equity swap is equivalent to creditors will be higher than their own interests diluted into the hands of the shareholders of tradable shares. This debt-equity swap to maintain creditor against loss, contrary to the principles. Accordingly require tradable shareholders to make compensation, compensation can be higher than the face value of premium issuance of new shares, creditors at a premium to partially offset the loss. Such as Joan source with the park's restructuring model design.
Between debt-equity swap with the listed company and the parent holding company reorganization of assets combined. The listed companies in the debt-equity swap action involves more complex changes to the listed company equity and equity-scale changes in operational procedures. The specific mode of operation can be designed such that: listed companies debt peel the parent holding company, the parent company of its relatively good assets repossessed available, or the listing of the company's debts and assets together stripping to the parent company, leaving an empty shell after The transfer of a controlling stake, stripped to the parent company's debt by a debt-equity swap operation. The above operation will not cause changes in the shareholding structure of listed companies, operating convenience, at the same time will be a combination of protection and shell resources. Such as the amount of shares in the case of this mode operation.
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