Dry information丨This article will help you understand the operation and mode of debt-for-equity swaps

Debt-for-equity swap as an optional way to deal with corporate bad debts，Improvement of long-term profitability of enterprises，The transformation of industrial structure has an improvement effect，Therefore, it has received widespread attention from the market。Hong Kong Xintong-Today I will introduce to you the operation and model of debt-for-equity swap，Let’s learn together! one、What is debt-for-equity swap?

When companies carry high levels of debt，and insolvent，When unable to repay，Financial management companies that can be established through the state，The original claims between banks and enterprises、debt relationship converted into equity、property rights relationship。in short，It is to convert corporate debtors into corporate shareholders.，The process of converting debt into equity，It is also a special way of corporate debt restructuring。

two、Debt-for-equity swap conditions and specific procedures

1. Enterprises targeted for market-based debt-for-equity swaps must meet the following conditions:：a、Good development prospects，Have feasible enterprise reform plans and relief arrangements；b、Main production equipment、product、Capabilities are in line with the national industrial development direction，Advanced technology，There is a market for the product，Environmental protection and safety production meet standards；c、Good credit status，No intentional breach of contract、Transferring assets and other bad credit records。
2. Enterprises under the following circumstances are prohibited from being targeted for market-based debt-for-equity swaps：a、Enterprises that maliciously evade debts；b、Enterprises with complex and unclear creditor-debt relationships；c、Companies that may contribute to the expansion of excess capacity and increase inventory；d、No hope of turning around losses、“Zombie companies” that have lost their prospects for survival and development。
3. Specific forms of debt-for-equity swaps：Implementing agencies carry out market-oriented debt-for-equity swaps。Unless otherwise stipulated by the state，Banks are not allowed to directly convert debt into equity。

Bank converts debt into equity，Claims should be transferred to the implementing agency、This is achieved by the implementing agency converting the debt into equity of the target enterprise.。4、Generally includes the following processes：a、Clarify the scope of applicable enterprises and bonds；b、Carry out market-oriented debt-for-equity swaps through implementing agencies；c、Independently negotiate to determine market-based debt-for-equity swap prices and conditions；d、Market-based raising of debt-for-equity swap funds；e、Standardize the implementation of equity changes and other related procedures；f、Realize equity exit。

three、Several ways for private equity funds to participate in debt-for-equity swaps

1. Establishing an asset management company Private equity companies can participate in the formation of an asset management company，Directly participate in debt-for-equity swaps through asset management companies。
2. As an investor in a debt-for-equity swap fund, when large enterprises implement debt-for-equity swaps，Since the funds required to purchase debt are relatively large,，Implementing agencies often adopt the method of “subsidiary establishment of funds” to implement，Private equity funds can participate in the fund as investors，and get a return on investment。
3. Private fund managers who initiate and establish funds as managers and are registered with the Asset Management Association of China may initiate and raise private equity funds.，and manage the assets in which it invests。
4. Private equity institutions that are entrusted to manage debt-for-equity swap assets can use their

Advantages

，In the form of asset securitization，Provide supporting services to asset management companies。

initiated by、How to manage distressed asset funds，Package and receive the converted equity of the asset management company for management and then exit，Earn management fees and transfer income。5、After the transferee asset management company has converted its shares into shares, the equity asset management company has implemented a debt-for-equity swap.，Ways to launch equity include corporate IPO、Listed on New Third Board、Mergers and acquisitions or direct transfers to other acquirers。

Private equity funds specialize in investment management and exit，Receive the equity of the asset management company and exit to make a profit after integration。

1. Provide consulting services for debt-for-equity swap implementation plan during the implementation process of debt-for-equity swap，Private equity institutions can serve as an independent third-party platform to participate in coordinating the relationship between multiple creditors of the company.，Maintain the common progress and retreat of all creditors。

You can also rely on your own experience in handling non-performing assets and rich investment experience in the field of "raising, investing, managing and exiting"，Provide banks with non-performing asset disposal solutions，and design a debt-for-equity swap plan，Attract social capital participation，Increase the success rate of debt-for-equity swap implementation。If you still want to know more about this aspect，Welcome to consult Hong Kong Xintong at any time!

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