Recently, project of market-oriented debt-to-equity swap of Echeng Iron & Steel Co., Ltd. pushed forward by Hwabao Trust landed with success. Project realized newly-added capital equity of 1.25 billion yuan of Echeng Iron & Steel, enterprise liability structure was improved effectively, asset liability rate decreased substantially, capital strength greatly enhanced, market competitiveness enhanced, “1+1>2” effects of cooperation between industry and finance were realized, boosting successful accomplishing of objectives of “lowering leverage, cost control, structure adjustment” of Echeng Iron & Steel. Meanwhile, the scheme this time had also achieved active breakthrough in aspect of transaction mechanism, with certain significance for financial innovation.
In 2016, the State Council released Opinions on Actively and Discreetly Lowering of Enterprise Leverage Ratio, State-owned Assets Supervision and Administration Commission also required enterprises to discreetly lower leverage ratio, and encouraged “pushing forward central SOEs with fine development prospects, and intent for equity swap which live up to national industrial development directions to actively carry out market-oriented debt-to-equity swap”.
Hwabao Trust, to do well on work of serving physical economy, supported profoundly industrial development and integration of China Baowu, and carried out decision deployment of the nation on discreetly lowering enterprise leverage ratio, had coordinated various sub-companies to provide support on financial profession for WISCO. Hwabao Investment affiliated sub-company Hwabao Trust established specialized teams at the beginning of 2017, went deep into relative enterprises of WISCO by visiting, provided personal service in finance, and discovered from them pressing need for lowering leverage in debt-to-equity swap of Echeng Iron & Steel.
Hwabao Trust thereafter organized project specialty groups, assisted enterprise in streamlining demands, collected basic materials, designed transaction schemes, utilized self advantages, and vastly associated with financial capital. Various sides closely collaborated and fight with synergy, coordinated in pushing forward, assaulting fortifications and tackling difficulties, and after nearly one year’s negotiation in numerous rounds, various kinds of obstacles existing in the project were solved and final landing of the project was realized.
Through successful landing of this project of market-oriented debt-to-equity swap of Echeng Iron & Steel, Hwabao Trust again explored one new route based on experience in supporting physical enterprise development and cooperation between industry and finance of numerous years. In the future, Hwabao Trust would further actively optimize business mode of cooperation betwen industry and finance, and strive for building more new bright spots in cooperation between industry and finance by Hwabao Trust.
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