Wu Xiaoling, deputy director of NPC Financial and Economic Committee, pointed out that the creditor's right is converted into equity, either to optimize the enterprise's equity structure, improve the enterprise's operation and slow down the current interest income in exchange for the result of future enterprise value enhancement, or to gain a greater say in enterprise restructuring and minimize financial losses. In either case, debt-to-equity swap is not a free lunch for the disposed enterprise, but a rebirth or a smooth market exit at the expense of transferring control.
Zhong Wenquan told China Business News that it is a good strategy for some unsustainable enterprises to reduce their debts through debt-to-equity swaps if they still have profitability. "For example, large-scale mergers and acquisitions by enterprises before were not very successful. In view of the fact that there is no problem with the profitability of the enterprise itself, a large number of creditor's rights can be recovered through debt-to-equity swaps, so that the enterprise can resume normal operations. " However, this is not the case for some China enterprises at present. If there are management problems in enterprises, such as the need to streamline personnel, or problems with the incentive mechanism of state-owned enterprises, it is necessary to replace the management and reorganize the company. In this way, bank creditors who enter the enterprise due to debt-to-equity swap may not be qualified to play this role.
Zhong Wenquan said that banks can play the role of financial consultants to help enterprises optimize their financial structure and provide capital chains, but only professionals in specific industries can make changes to the management of specific enterprises. Take steel enterprises as an example, bank creditors may never have specific experience in managing steel enterprises. In addition, banks will eventually withdraw from equity, and the role of banks will become private investors, which is often not their specialty. In addition, it often takes a long time from controlling the board of directors to making changes.
In addition, Wu Xiaoling also pointed out that at present, all major banks in China are listed companies, and banks should be responsible not only to state-owned shareholders, but also to Chinese and foreign shareholders in the capital market, and all major issues should be made public. Therefore, if the current debt-to-equity swap involves bank debt, it must be handled in a market-oriented way and adhere to the principle of fair trade. At the same time, she also suggested that banks set up asset management companies, initiate the establishment of equity investment funds, and use social funds to complete equity investment in non-financial enterprises.