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State-owned listed companies with warrants convertible bond financing Thinking

Author: TangXianJie¡¡QiuJiaPeng From: www.yourpaper.net Posted: 2009-05-27 12:49:18 Read:
[Abstract] split share structure requires listed companies to state-owned shares traded, state-owned listed companies under the premise to ensure that the state-owned capital control over how to use the separable trading convertible bonds of this new financing instruments to refinance, especially exercise secondary equity financing to achieve state-owned capital preservation and appreciation of the concerns of the people. Separable transactions convertible bonds exercise as an entry point to analysis of the factors affecting the exercise, and then proposed to ensure the control of state assets under the premise separable trading convertible bonds exercised equity financing proposals to improve the efficiency of financing .
[Words] state-owned listed companies; detachable convertible bonds; financing proposals


2005 Securities Regulatory Commission issued the "Notice on the related issues of listed companies split share structure reform pilot", officially launched the pilot of listed companies split share. Followed by the State-owned Assets Supervision and Administration Commission of the State Council issued "guidance" on the state-controlled listed companies split share structure reform, the controlling shareholder of the state-controlled listed companies according to the adjustment of state-owned economic layout and structure, and promote the stable development of the capital market principles, combined with the actual situation of enterprises, minimum stake in the listed company to determine the split share structure reform, to ensure that the state-owned capital control over the premise, to achieve the goal of increasing the value of state-owned capital sustained and stable. With the conduct of the split share structure reform, China's state-owned enterprises and state-holding enterprises, state-owned shares in the case of state-owned capital control over tradable. 2006 in order to further improve China's securities market, the SFC published the issue of the securities of listed companies management approach "separable transactions for the first time allow listed companies to issue convertible bonds (hereinafter referred to as" detachable convertible bonds ") to refinance. Subsequent environmental changes due to China's capital market and separable bond financing advantage, the traditional growth share rights issue to refinance a clear slow down in the primary market, the increasing number of listed companies are turning issue separable bonds of this new financing instruments to refinance, especially large state-owned listed companies.
Detachable convertible bonds issued by the Issuer in accordance with statutory procedures, giving investors a specific time in the future, under certain conditions the exercise of warrants, stock rights in accordance with a specific price subscribe for ordinary shares mixed corporate bonds, corporate bonds plus warrants a combination of products, in essence, bonds with warrants. As a kind of corporate bonds, detachable convertible bonds in addition to the general characteristics of the bonds at issue, which has the characteristics of bonds, shares and options, debt issuance and listing immediately and equity, options separately. Separable from the perspective of listed companies of the issuer, issue convertible bonds in addition to be able to raise large amounts of debt capital, the advantage is for listed companies the opportunity to obtain secondary equity financing - exercise.
As a state-owned listed companies generally have very strong financial strength and good operating results, and thus can be easily made detachable convertible bonds issued in the domestic securities market subject qualification. However, in view of the detachable convertible bonds characteristics, the use of state-owned listed companies detachable bonds exercise secondary equity financing, not only to consider their own development and funding needs to create the conditions of the exercise promote detachable convertible bonds exercise to improve the the exercise success rate and financing efficiency, but also to ensure the control rights of state-owned capital, facing exercise equity financing led to the problem of state-owned equity dilution risk.

Second, the impact of state-owned listed companies detachable convertible bonds exercise factor analysis

State-owned listed companies to issue detachable convertible bonds to the company's development financing, under the premise of ensuring the state-owned capital control over, prompting detachable convertible bonds exercise, and to provide ongoing financial support for the follow-up project investment, state-owned capital increasing the value of long-term, sustained and stable target. The state-owned listed companies detachable convertible bonds successfully exercised, not only by internal factors, but also with the external environment is closely related to whether the right of the line period. Specific influencing factors are as follows:
(A) the terms of the exercise of factors
Terms of the exercise is separable listed companies to issue bonds to raise the announcement about the provisions of the conditions of the exercise. These terms are separable bonds under what conditions can exercise (exercise period), as well as how investors can exercise (exercise price, the exercise ratio, etc.) to make restrictions, such as the exercise price factors. As we all know, detachable convertible bonds comes warrants a European call option, the only exercise period of the market price of the underlying stock is higher than the exercise price, investors will be profitable, the exercise is to be successful . If the exercise price is determined much higher than the existing market price of the underlying stock, the market price of the underlying stock in the vesting period rose to the exercise price, the smaller the probability, even if the stock price rose more than the exercise price, the price difference is relatively small too little for speculative short-term capital gains for investors, their expected benefits, these will affect the enthusiasm of investors to invest detachable convertible bonds, is not conducive to the separable issuance of convertible bonds and exercise. On the contrary, the exercise price setting is too low, attracted a large number of investors to invest in, the exercise will also be successful, but listed companies to raise funds through the secondary exercise is relatively small and less than the expected interest financing effect; during the exercise and the terms of the ratio of exercise will also affect the detachable convertible bonds exercise results and success rate of the exercise. Thus, the terms of the exercise a direct impact on the success rate of the state-owned listed companies detachable convertible bonds exercise, thereby affecting the efficiency of the equity financing.
(B) the results of factors
The performance of the company is operating the operating efficiency achieved by the operation of assets of the Company during the period the investors exercise decision-making issues of direct concern. Detachable convertible bonds exercised or not, is by investors based on the listed company's financial position, results of operations and development potential to make investment decisions. Have a good financial position and operating results of listed companies to attract long-term investors in the capital market, in particular, showed a strong potential for future development of listed companies but also enhance investor confidence, improve investors detachable convertible bonds line the right of initiative. On the contrary, the listed companies to issue convertible bonds separable, the financial position of the performance is not satisfactory, debt financing funds operational efficiency is not high, results of operations not achieve the desired goals, the lack of potential for further development is not conducive to attracting long-term investors, investment The lack of confidence in investing in the company, detachable convertible bonds exercise decision-making will be hesitant. Issued detachable convertible bonds of state-owned listed companies within the right of the line during the financial condition, results of operations, good or bad, and whether they have a strong potential for the development of a direct impact on investment decisions detachable convertible bond holders exercise, directly related to separable success rate bonds exercise, thereby affecting the efficiency of state-owned listed companies exercise financing.
(C) the underlying stock factors
Detachable convertible bonds exercised the underlying stock, after the end of the issue by the trading activities of the participants of the warrants until the exercise ago, changes in the underlying stock to its will have a huge impact. Warrants holders of options exercised to maturity or early trading, direct attention to the underlying stock price, exercise price, investors will be trade-offs between the share price and the exercise price. The two are equivalent, in the case of not considering the fee, exercise and trading gains are the same; when the current is greater than the latter, investors generally will choose transaction until the two are equal, then consider other The factors to decision-making exercise or not exercise; smaller than the latter, more favorable than trading, investors generally will choose to continue to hold the detachable convertible bonds, buy stocks when the vesting period. Upon exercise due to the nature of the detachable convertible bonds exercise is the behavior of investors implementation of European call option, when the market price of the underlying stock is higher than the exercise price, the investors exercise the option to get income for difference, the greater the difference, the more returns investors exercise the higher the success rate, the contrary, it will give up the exercise, the loss of the cost of the purchase option. So, the vesting period of the underlying stock price high and low, and the exercise price differences directly impact the results of exercise and exercise success rate to determine the efficiency of the financing of listed companies in secondary exercise. Third, the implementation of state-owned listed companies detachable convertible bonds proposed effective financing
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