Abstract: This case describes the process of Panzhihua New Steel & Vanadium implementing two fundamental asset restructurings and two cash options. The first asset restructuring of merger by absorption failed while the second one of assets replacement succeeded; the first cash option was faced with huge exercising pressure while the second one was almost not exercised; the whole process lasted for more than 4 years and the international financial crisis broke out, domestic macro economy and policies kept changing, the steel industry fluctuated, stock market fluxed drastically within this period. As a protection mechanism of medium and small investors’ interests, cash option system is a unique innovation of China’s stock market.This case can produce evidences in both positive and negative contexts for us to analyze cash option system’s functioning mechanism.
