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1、 From financial management to see debt-equity swap of bad assets to resolve the role of banksDebt-equity swap, debt-equity swap that is short, refers to the debtors creditors would have a legitimate claim its law into the debtors investment and to increase the registered capital of the debtors condu
2、ct, which includes the elimination of debt and equity are two aspects of the generation . The reason why the current hot topic into a debt to equity was mainly due to it as a major economic policy in China have revitalized the state-owned commercial banks to take bad assets to bail out state-owned e
3、nterprises and the promotion of two important mission, from the banks point of view stripped of the non-performing loans and the debt-equity swap, the increase in the liquidity of bank assets, so that the safety of bank loans are guaranteed, the credit scale to be more efficient configuration, the b
4、anks will increase profitability. From a business perspective through the implementation of debt-the debt into capital, which eliminates the large debt-servicing costs, reducing the financial burden of enterprises and reduce the enterprises asset-liability ratio, so that the financial situation of e
5、nterprises improvements that will not only help businesses get rid of the present difficulties and more conducive to the transformation of operational mechanisms, accelerate the establishment of modern enterprise system, promoting long-term development. This paper from a financial management point o
6、f view expounded on Chinas banking sector to resolve debt-burden of bad assets and guard against financial risks, as well as the significance of the implementation process in the implementation of debt-issue to be resolved. First, the implementation of debt-equity swap process would take several asp
7、ects of explicit (A) to determine whether the debt-an important indicator of success is to look at its ability to restore an enterprise to maximize market value, to achieve the maximization of enterprise value. If only the debt converted to equity as a financial game, without a substantial corporate
8、 restructuring, I am afraid that most enterprises will fall into a loss after debt-equity swap position. Therefore, in order to ensure the quality of debt-equity swap, debt-equity swap deal with the proposed operating conditions of enterprises, financial situation to conduct a comprehensive in-depth
9、 understanding, analysis business reasons for the difficulties that imposes an unreasonable adjustment of assets and liabilities, the basis of comparison in a variety of programs on the business scenarios, scientific design of debt-equity swap program and asset restructuring program, the debt-equity
10、 swap work with enterprise reform and development of a truly combine to maximize recovery and to enhance the market value of debt to equity companies. (B) the debt-equity swap proposed by the banking system thinking and moral hazard problems. The implementation of debt-will naturally be re-operated
11、on the separation system and to the universal banking system thinking. In the Law on Commercial Banks in the provisions of commercial banks are not allowed to enterprises to invest the funds into commercial banks to conduct a more stringent requirements. In fact, the problem lies not in whether a se
12、parate operation, it is important to establish a reliable commercial banks within the firewall between the different businesses separated, but now in order to resolve non-performing assets of commercial banks could be considered directly for business banks issue their own debt-handling decisions, so
13、 that part of the commercial banks to hold corporate equity, the shareholders of the enterprise in order to establish the relationship between banks and enterprises. In our country to adopt a commercial bank was established as a principal financial asset management companies, commercial banks non-pe
14、rforming assets into the existing financial asset management companies equity companies from the original bank and the enterprise claims and liabilities into financial assets management companies to enterprises stake in the relationship between debt service to Angufenhong. The problem is as a transi
15、tional institutions financial asset management companies have little incentive to actively carry out debt-effort? That there is a moral hazard problem. To prevent moral hazard, and the spin-off non-performing assets in the debt-equity swap should be done in a strict responsibility system and strengt
16、hen the whole societys sense of credit, corporate debt-equity swap program is effective implementation of the bank loans, the availability of opportunity to vacancies and disguised vacant bank loans Tao Feizhai conduct surveillance and preventive measures, otherwise the objective of dealing with non
17、-performing loans is expected to be difficult to achieve, the phenomenon of evasion of bank debt may become more serious. (C) the debt-equity swap of the legal issues involved in the process. Non-performing assets of banks in all countries, the reorganization of experiences and lessons prove that th
18、e process of non-performing assets in the bank to give legislative support, policy coordination, and system innovation is very important. Divestiture and restructuring of bank non-performing assets is a systematic project. Of the most important aspects of the external environmental requirements are:
19、 there is a corresponding legislative support to establish the legal status of asset management companies and have the power; there is a corresponding supporting policies in order to effectively and smoothly spin-off and disposal of non-performing assets; also need system innovation to change the cu
20、rrent structure and operation of non-performing assets not suited to spin-off and disposal aspects. China set up a special asset management company, first encountered in the existing laws and regulations, including the financial sub-sector management policies, restrictions, restrictions on investmen
21、t ratio, state-owned asset disposal authority, restrictions on the size of external financing and so on. Therefore, asset management companies to operate efficiently, we first need to establish a special legal framework, giving it a commercial banking and investment banking business of the dual func
22、tion, not only to enable it in the shortest possible time, with minimal cost to take over bad assets of banks , and can maximize those assets reorganization, packaging and sale, so the need for a companys operations to adapt to the special regulations, the nature of the companys position, acquisitio
23、n, management and disposal of bad bank loans, as well as the means to use capital markets financing, mergers and acquisitions and restructuring etc. clearly defined. In addition, the Government still needs financing, taxation, securities issuance, foreign attract investment, access to international
24、strategic investors, as well as topics related to the interests of the organization and coordination aspects of developing a series of supporting policies. If the relevant laws and lack of support, investor confidence will be greatly affected, asset management, debt restructuring carried out by the
25、company will falter. Second, the process involved in the debt-equity swap pricing (A) How to determine a reasonable price the bad debt. Asset management companies in the acceptance of bank non-performing loans during the spin-off is inevitable to encounter in the purchase price problem, the determin
26、ation of the purchase price can have the following options: 1. The full price of the acquisition, that is, according to the original value of claims to determine the acquisition price. This method for high-quality bonds or risk-free claim is applicable, but the problem is that commercial banks were
27、separated from the claims are non-performing loans, whether the recovery of claims and whether there is a big full recovery of the uncertainty or risk, if the claims for these risks by the full price of the assignment is not only contrary to the reasoning, it is difficult for the acquirer to accept.
28、 2. Discount purchase, that is, non-performing loans of banks according to a certain discount rate for the acquisition. The risk of non-performing loans due to various different levels, so the discount rate of the natural differences between each other. Therefore, in practice, due to worse resale va
29、lues high or low a direct bearing on the economic interests of both sides, to the risk of claims for each category are to determine a fair and agreeable to both sides worse resale values often encounter difficulties. Reposted elsewhere in the paper for free download 3. Valuation acquisition, that is
30、, recognized by the Ministry to employ well-known asset evaluation agencies and accounting firms through a rational, rigorous and fair way to determine the non-performing loans to the transfer price. The transfer of the same discount as compared to the acquisition value is undoubtedly a more rationa
31、l and more just manner, thus easy to determine the transfer price acceptable to both sides. (B) the debt-pricing model choice. Asset management companies to undertake non-performing assets of banks will convert it to a stake in the enterprise, how to determine its value, that is, the number of share
32、s held by the so-called debt-pricing issues, debt-pricing model are mainly the following Species: 1. According to the book value pricing: book value pricing is based on the book value of the original loan as well as the scheduled cash inflows for the stock price, which is non-performing loans, the h
33、ighest price. This pricing method to avoid restricted areas and to avoid some of the theories that people raised on the controversy surrounding the loss of state assets is more than the other methods have an advantage in our countrys current economic form has a special role. 2. By mutual agreement v
34、alue pricing: refers to non-performing assets on behalf of banks to address the asset management companies and enterprises the pricing of equity mutual agreement. This method avoids the pricing across the board according to the book value of the disadvantages of both sides to give greater room for n
35、egotiations, which will help in reaching agreements. 3. According to rating agencys assessment of value pricing: that is registered by other organizations providing social assessment report, in accordance with the State Council, the conditions of corporate debt-equity swap, debt-pricing of corporate
36、 shareholding system reform in accordance with the asset appraisal institution approach. 4. According to market value pricing: According to Company Law provisions in the settlement companys assets, the companys creditors have priority over the rights of repayment of equity people, so its bank debt i
37、n the enterprise into the enterprises equity, the The priority can be a certain degree of premium to compensate for; while the market value of the debt pricing can bring in the concept. The value of the companys debt to the creditor equal to the present value of cash flow, according to its cash flow
38、 to reflect the risk discount rate discount. Conversion of debt to equity ratio or price refers to the amount of debt being converted the ratio between the amount of registered capital, to date, countries do not directly related to the debt-pricing laws and regulations, but only some indirect princi
39、ple provisions. Mainly include the system of paid-up registered capital requirements and to protect the security of state-owned assets to prevent the principle of state-owned assets, and other requirements. In a legal context, a specific convert debt to equity ratio or the price determined through c
40、onsultation by the relevant parties, which is based on the debtors financial condition and operating conditions, the basic unit of a share or per share net asset value, in addition to considering the industries in which the debtors circumstances, prospects for development, asset quality, product and
41、 technology and other factors. Third, actively construct asset management companies exit mechanism Asset management companies of the nature and responsibilities of that exploration assets and capital withdrawal mechanism for achieving the strategic goal of debt-an important step. Only a perfect exit
42、 mechanism in order to truly resolve the banks financial risk and asset management companys own potential risks. Corporate debt to equity debt to equity is just not enough interest in the enterprise must also be fully up and running, such as asset management companies equity holdings by foreign inve
43、stors to transfer, debt-buyback enterprises according to law, listing . However, whether there are investors willing to buy, enterprises have the ability to repurchase, the successful listing is not wishful thinking can be achieved, must have two conditions, one is the enterprise through debt-equity
44、 swap to reduce the financial burden on enterprises and through restructuring and strengthening management of real improved efficiency, enabling asset preservation and appreciation, can there be investors willing to buy corporate equity, debt-equity swap may be able to purchase an enterprise to an e
45、nterprise to be successful listing. Another important condition is that we should vigorously promote investment banking business innovation and the establishment of more developed capital markets. At present, Chinas property rights trading there are still many difficulties and obstacles, of which one of the reasons is that capital market constraints, so to speed up the capital market, especially the development of securities markets is very important, it is related to the debt-the key to the success of . Reposted elsewhere in the paper for free download
