Question 1: What does debt-for-equity swap mean? Please explain it in plain and easy-to-understand language, thank you. To put it simply

You owe me too much debt and you can’t afford it now. In order to avoid bankruptcy

I will convert the debt into shares and I will become a shareholder of your company. Interests are tied together

This is China’s unique state-owned enterprise reform arrangement

It is the national policy that provides the backbone for the survival of state-owned enterprises

Question 2: What is the convertible bond? What's the meaning? Convertible bond (CB)

Convertible bonds are not stocks! It is a bond, but the person who buys the convertible bond has the right to convert it into stocks in the future.

To simply illustrate with convertible corporate bonds, listed company A issues corporate bonds, which means that creditors (i.e. bond investors) can hold the bonds to company A after holding them for a period of time (this is called a lock-up period). In exchange for shares of Company A. Creditors are transformed into property rights holders as shareholders. The exchange ratio is calculated by dividing the face value of the bond by a specific conversion price. For example, if the face value of a bond is 100,000 yuan, divided by the conversion price of 50 yuan, it can be exchanged for 2,000 shares of stock, totaling 20 lots.

If the market price of Company A's stock has reached 60 yuan, investors will definitely be willing to convert, because the cost of stock exchange is the conversion price of 50 yuan, so after converting the stock, they will immediately sell it at the market price of 60 yuan, and each share will be sold at a price of 60 yuan. You can earn 10 yuan, and the total *** can earn 20,000 yuan. This situation is called conversion value. This kind of convertible bond is called in-the-money convertible bond.

On the contrary, if the market price of Company A's stock drops to 40 yuan, investors will definitely be unwilling to convert, because the conversion cost is the conversion price of 50 yuan. If they really want to hold the company's stocks, they should go directly If you buy it on the market at a price of 40 yuan, you should not exchange it for a cost price of 50 yuan. This situation is said to have no conversion value. This kind of convertible bond is called out-of-the-money convertible bond.

For example, "Baotou Steel Conversion" has a conversion price of 1.74 yuan/share since June 12. What does it mean?

Answer: From June 12, you have the right Each bond with a face value of 1,000 yuan can be exchanged for (1,000/1.74) shares of stock at 1.74 yuan/share.

Question 3: What does debt-for-equity swap mean? What are the benefits of debt-for-equity swap? 1. What is debt-for-equity swap?

The so-called debt-for-equity swap refers to the establishment of a financial asset management company by the state. , the acquisition of non-performing assets of banks transforms the original creditor-debt relationship between the bank and the enterprise into a controlling (or shareholding) and controlled relationship between the financial asset management company and the enterprise. After the creditor's rights are converted into equity, the original principal repayment Interest payments are converted into dividends per share. The National Financial Asset Management Company actually becomes a stage-holding shareholder of the enterprise, exercises shareholder rights in accordance with the law, and participates in the decision-making of major company affairs, but does not participate in the normal production and operation activities of the enterprise. After the economic situation of the enterprise improves, through listing, transfer or enterprise The funds are recovered in the form of repurchases. In other words, the financial asset management company serves as the main body of investment and converts the original non-performing credit assets DD of commercial banks, that is, the debts of state-owned enterprises, into the equity of the financial asset management company in the enterprise. It does not convert corporate debts into national capital, nor does it write off corporate debts in one go, but changes the original creditor-debt relationship into a relationship between financial asset management companies and enterprises, between holding and being held, and controlling and being controlled. Changed from the original principal and interest payments to dividends based on shares.

From the perspective of international relations, debt-to-equity swap means that when a debtor country faces economic difficulties or a decline in credit rating, it redeems its foreign debt in its own currency at a certain discount based on market conditions. The creditor then invests in the debtor country's currency, converting the original debt into equity. This situation is known as debt securitization by the debtor country.

2. The significance and role of debt-for-equity swaps

The connotation and entire model of the policy-based debt-for-equity swaps currently implemented have been expanded from the aspects of reform and development. In terms of reform significance, the inherent meaning of debt-for-equity swaps is actually closely linked to the reform goals of promoting a modern enterprise system, developing a diversified property rights structure, and implementing strategic reorganization of state-owned capital as stipulated by the 15th National Congress of the Communist Party of China. Established a good deed and conditions.

From a development perspective, it is closely related to solving many major problems faced by our current state-owned enterprises. Debt-for-equity swap does not mean that the state or financial institutions with state background recognize the bad debts of enterprises, but it means eliminating old production capacity, adjusting the property rights structure, promoting the update of technology and equipment, and realizing the optimal allocation of resources in the space of the whole society. . Its advantages are mainly reflected in the following aspects:

(1) It revitalizes the bank's non-performing assets, separates the bank's non-performing assets, and converts them into corporate equity. In this way, the bank's credit can be greatly improved status, thereby revitalizing bank funds. Banks are used to restructure enterprises, change single state-owned capital, and increase the activity of state-owned capital.

(2) Strengthen the management supervision of enterprises. In our country, the capital market is underdeveloped, and state-owned enterprises rely heavily on bank loans for funds. However, the creditor status of banks makes it impossible for banks to restrict the behavior of enterprises. At present, there is a prominent phenomenon that it is difficult to win a bank's creditor's rights dispute in the court due to various reasons. Even if the lawsuit is won, it cannot be implemented. After the debt-to-equity swap is implemented, the bank obtains the right to supervise the enterprise, which can increase the degree of binding force on the debtor enterprise, prevent the short-term operation of the enterprise, and protect the rights and interests of the bank.

(3) Reducing the burden on state-owned enterprises will help achieve the goal of getting out of trouble. The key points of corporate "debt-for-equity swaps" are as follows:

1. Focus on large and extra-large national key enterprises that play a decisive role in economic development;

2. Support nearly a dozen Enterprises that have undertaken key national projects in recent years have reduced their debt burdens, prompting them to reach production and efficiency as soon as possible, and upgrade their industries;

3. Focusing on the two major goals of three-year reform and relief of key state-owned large and medium-sized enterprises, promote loss-making enterprises Qualified enterprises can turn around losses and transform themselves. The goal of getting out of trouble for state-owned enterprises is arduous, and debt problems are one of the main obstacles. After the debt-to-equity swap, the company does not have to pay principal and interest, and its burden is reduced; at the same time, the balance sheet becomes healthier, making it easier for the company to obtain new financing. Moreover, debt-for-equity swaps involve the property rights system of enterprises and encourage enterprises to establish new operating mechanisms as soon as possible

(4) There will be little social shock and it is easy to obtain support from all parties. Debt-for-equity swaps take into account the interests of finance, banks, and enterprises. The National Bank's debt-to-equity conversion did not simply write off the debt, but changed the debt repayment method, from a lending relationship to an investment cooperation that does not require repayment of principal. It did not increase fiscal expenditures, but also reduced the debt repayment burden of enterprises, and the bank also gained management right. This is a debt restructuring plan with minimal actual value and little social shock. Therefore, it can be used on a larger scale and is conducive to achieving results in getting rid of the debt problems of national banks and state-owned enterprises in a relatively short period of time.

In summary, debt-for-equity swaps are of great significance to economic development. However, there is currently no law on debt-for-equity swaps in our country, and the government still needs to issue... >>

Question 4: Understand what debt-for-equity swaps mean with a picture. Debt-for-equity swaps Equity, as the name suggests, is the conversion of debt into equity. It is a kind of debt restructuring and one of the common ways to dispose of non-performing assets. Debt-for-equity swaps generally involve financial asset management companies as the main body of investment, converting commercial banks' original non-performing credit assets DD, that is, the debts of state-owned enterprises, into the financial asset management company's equity in the enterprise. It does not convert corporate debts into state capital, nor does it write off corporate debts in one fell swoop, but changes the original creditor-debt relationship into a relationship between holding and being held, and controlling and being controlled, between financial asset management companies and enterprises. Changed from the original principal and interest payments to dividends based on shares.

The implementation of debt-for-equity swaps generally plays two roles: one is to reduce the non-performing loan ratio of banks; the other is to help enterprises deleverage and reduce operating pressure.

From last year’s stock market crash to supply-side reforms, they are all undoubtedly centered on “deleveraging.” Corresponding to the effect of debt-for-equity swaps, the two "Opinions" were officially issued this time and clarified the road map for my country's "deleveraging". From the overall spirit, this "deleveraging" is different from previous "debt-for-equity swaps". This "debt-for-equity swap" will be based on market-based choices and based on the principles of no bailout, no coercion, and no exemption from liability. . Let the market participate and carry out "deleveraging" work according to its own needs. The government plays an organizational and coordinating role, not a scapegoat. Market-oriented choices allow high-quality companies to reduce debt pressure while also lowering the bad debt rates of commercial banks.

Question 5: What is the debt-for-equity swap mentioned? If you know, please explain. The so-called debt-for-equity swap refers to the state setting up a financial asset management company to acquire the non-performing assets of the bank and converting the original relationship between the bank and the enterprise. The creditor's rights and debt relationships are transformed into equity and property rights relationships between financial asset management companies and enterprises.

After debt is converted into equity, the original principal and interest payments are converted into dividends based on shares. The National Financial Asset Management Company actually becomes a periodic shareholder of the enterprise, exercises shareholder rights in accordance with the law, and participates in the company's decision-making on major affairs, but does not participate in the normal production and operation activities of the enterprise. After the economic situation of the enterprise improves, through asset restructuring, listing, The funds are recovered in the form of transfers or corporate repurchases.

Question 6: What does debt-for-equity swap mean? It actually means converting your debt to the enterprise into your equity in the enterprise, or it can be understood as using your debt to the enterprise as an investment in the enterprise.

For enterprises, it increases owner's equity and reduces debt.

Question 7: What is debt-for-equity swap? Hello, I hope the following answers are helpful to you!

"Debt-for-equity swap" refers to the conversion of an enterprise's debt into equity, also known as debt capitalization. It refers to the behavior of the debtor converting debt into capital and the creditor converting creditor's rights into equity.

Beijing Docket Law Firm

Reference: "Legal Practice on Enterprise Restructuring and Reorganization"

Question 8: What is debt-for-equity swap? What is the significance of the implementation of debt-for-equity swap? The so-called debt-for-equity swap means that the state establishes a financial asset management company to acquire non-performing assets of banks and transform the original creditor-debt relationship between banks and enterprises into a holding between financial asset management companies and enterprises. (or shareholding) and the relationship between being controlled, after the debt is converted into equity, the original repayment of principal and interest will be converted into dividends based on shares. The National Financial Asset Management Company actually becomes a stage-holding shareholder of the enterprise, exercises shareholder rights in accordance with the law, and participates in the decision-making of major company affairs, but does not participate in the normal production and operation activities of the enterprise. After the economic situation of the enterprise improves, through listing, transfer or enterprise The funds are recovered in the form of repurchases.

Significance: The connotation and entire model of the currently implemented policy debt-for-equity swap have been expanded from two aspects: reform and development. In terms of reform significance, the inherent meaning of debt-for-equity swaps is actually closely linked to the reform goals of promoting a modern enterprise system, developing a diversified property rights structure, and implementing strategic reorganization of state-owned capital as stipulated by the 15th National Congress of the Communist Party of China. Established a good deed and condition. From a development perspective, it is closely related to solving many major problems faced by our current state-owned enterprises. Debt-for-equity swap does not mean that the state or financial institutions with state background recognize the bad debts of enterprises, but it means eliminating old production capacity, adjusting the property rights structure, promoting the update of technology and equipment, and realizing the optimal allocation of resources in the space of the whole society. .

Question 9: Can debts between companies be converted into equity? Yes. And debt-for-equity swaps have the following disadvantages.

(1) Helps improve the efficiency of credit resource allocation of enterprises

Optimizing the allocation of credit resources is one of the basic functions of banks. Under conditions of incomplete information, banks with monitoring functions support effective financial mechanisms. However, if bank financing cannot be closely linked to information production or monitoring based on continuous transaction relationships, banks will not be able to optimize credit allocation. Functionality will also be greatly reduced. Direct holding of company equity by banks is one of the important ways for banks and enterprises to form a close bank-enterprise relationship based on long-term transaction relationships. Hoshi et al. (1991) pointed out that compared with other bank-enterprise relationships based on intermediary information, commercial bank shareholding has more advantages in information production, especially continuous information production and monitoring direction, which helps to improve Efficiency of credit allocation to shareholding enterprises.

(2) It is easy to cause soft budget constraints in enterprises

"Soft budget constraints" do not only exist in state-owned enterprises, but are closely related to fiscal burdens and can easily cause many economic problems. Problems such as moral hazard of corporate managers, bad and bad debts of banks, financial risks, etc. In view of the special status of commercial banks in my country's financial system, when banks hold shares in enterprises, they will be regarded as implicit guarantees for the enterprises, which can easily cause enterprises to excessively occupy financial resources and form a "soft budget constraint" phenomenon of credit resources.

In addition, Luo et al. (2011) conducted a study using my country's A-share listed companies from 1999 to 2006 as a sample and found that corporate executives with higher bank shareholding ratios spend more on the job, which in turn leads to an increase in the expenses of shareholding companies.

(3) Enterprises have to endure "painful" restructuring plans and processes

In debt-for-equity swaps, creditors are in a dominant position, and debtors can only be in a relatively passive position. The significance of debt-for-equity swaps is not only to reduce the interest burden of enterprises, but more importantly, to increase the control of creditor banks, increase the pressure on loan recipients, and increase the influence of banks and new shareholders after equity swaps on corporate financial issues. . Enterprises must be able to accept severe or painful restructuring plans, such as changes in corporate leaders, financial directors, layoffs, spin-offs, acquisitions and mergers, etc. Therefore, debt-for-equity swaps are by no means chocolate candy for debtors, but a bitter medicine.

(4) It may lead to inefficient investment and thus damage the value of the enterprise

After the implementation of debt-for-equity swap, commercial banks have both the creditor and shareholder status of the enterprise. Although the enterprise can obtain More bank loans, but the convenience of financing will reduce the investment efficiency of enterprises and increase investment errors. Therefore, the profitability and growth rate of enterprises have not improved. This is supported by the research of Lin et al. (2009). Lin et al. analyzed the top ten shareholders of A-share listed companies from 1994 to 2004 and found that although companies held by banks are more likely to obtain financing facilities, However, these companies did not make good use of these funds, and a large number of inefficient investments damaged the value of the companies.