In Hong Kong, we build a global business empire

Lin Haoran naturally understood that Kecorian's well-intentioned reminder meant no harm, but was genuinely trying to give him some pointers.

After all, the other party has been working in Hollywood for over a decade; what kind of open and covert attacks hasn't he seen?

The fact that the old man said these words shows that he truly regarded Lin Haoran as someone he could entrust with his affairs, rather than simply a trading partner.

“Mr. Kerkorian, I have taken your reminder to heart.” Lin Haoran said sincerely, “Although I am not yet fully familiar with the rules of Hollywood, once I take over, I will hire the best professional managers in Hollywood to manage things, and I will not give orders blindly on my own.”

Kirk Kocorian nodded and continued, "You're right to think that way. I've seen too many rich people go into Hollywood thinking that as long as they throw money at it, they can make good movies, only to end up losing everything."

The film industry isn't something you can succeed in just by having money; you have to respect its rules.

MGM has been getting worse and worse under my management, which shows that I'm not suited to making movies, but you're different. I believe you can do better than me.

He paused, then added, "Also, although I failed miserably in running a film company, my experience over the past ten years has given me some insights. I can see that you genuinely treat MGM as a business, not a toy."

That's right. Filmmaking is first and foremost a business, then an art form. Those who constantly talk about art but don't treat investors' money like real money will eventually ruin their companies.

"Mr. Kerkorian, I have another request. You have been in charge of MGM for more than ten years. You must be very familiar with the major shareholders of MGM Studios and MGM Grand Hotel, right?"
I hope you can assist me in successfully acquiring the remaining shares and completing the privatization of MGM. You know, those institutional investors trust you much more than I do. With your involvement, things will go much more smoothly.

Kirk Kocorian was somewhat shocked. He exclaimed, "Mr. Lin, you actually want to privatize the entire MGM?"

His shock was not unfounded.

In his vision, Lin Haoran's acquisition of his 47% stake in MGM Studios and 52% stake in MGM Grand Hotel would already be a massive deal worth $6.5 million.

Now, Lin Haoran actually wants to buy up all the remaining shares of the two companies and turn them back into private companies.

This means that even if the price of acquiring the remaining shares does not exceed $1 billion, the total investment will still exceed $1 billion, and at least $11 billion is needed to completely privatize MGM.

“Yes, Mr. Kerkorian.” Lin Haoran picked up his coffee cup, took a sip, and smiled calmly. “What I want is 100% controlling stake, to turn MGM into my own company completely, without having to consider the opinions of any external shareholders.”

The film studio is burdened with debt, and I need to implement sweeping reforms. If there are still a bunch of institutional shareholders interfering, nothing can be accomplished.

Although the hotel is profitable, there's still a lot of room for improvement, and I don't want to be held back by the opinions of a few minority shareholders.

He put down his coffee cup and continued, "After privatization, I can change things however I want, invest as much money as I want, without having to hold shareholder meetings, issue financial reports, or deal with those annoying institutional investors."

This is the most advantageous option for MGM's long-term development.

"However, privatization means you will directly face MGM/UA's $7.5 million debt. It will no longer be a publicly traded company, and you will not be able to raise funds by issuing shares. All the debt will have to be borne by you personally."

Mr. Lin, I know you have money, but $750 million in debt is no small amount, and MGM Studios has been losing money year after year, with annual interest payments approaching $100 million. This is no joke.

At this moment, Kirk Kerkorian still couldn't understand Lin Haoran's idea of ​​privatizing MGM.

Once privatized, Lin Haoran will be solely responsible for all the debts.

The annual interest on his debts alone amounted to more than 90 million US dollars.

In addition, a complete privatization would require at least $11 billion and $7.5 million in debt principal.

The miscellaneous expenses add up to nearly $20 billion.

That's $20 billion! That's no small sum. Even many of America's largest conglomerates might not be able to come up with that amount all at once.

Kirk Kerkorian picked up his whiskey glass, took another sip, and scanned Lin Haoran's face, unable to figure it out no matter how hard he tried.

What is this young man thinking?
“Mr. Lin, I’m not trying to doubt your judgment.” Kirk Kocorian put down his glass, his tone becoming serious. “I’ve been in the business world for decades and have seen too many people ruin themselves because of their greed for size and comprehensiveness.”

You have money, ambition, and vision—these are all good things—but MGM's situation is far more complex than you imagine; it's not something that can be solved simply by throwing money at it.

He paused, then continued, "Those debts are historical problems that can't be solved in a day or two. Even if you invest one or two hundred million dollars every year to restructure the film industry, the interest alone will eat up nearly one hundred million dollars. What can you do with the rest of the money? It's just a drop in the bucket."

You could invest for three to five years, pouring in billions of dollars, and you might not even see a ripple.

He was unaware that Lin Haoran planned to pay off the $7.5 million debt directly after privatization; if he had known, he would have been even more surprised.

After all, few people are willing to come up with a huge amount of cash at once to pay off their debts.

Most companies adopt the practice of borrowing new money to repay old debts, delaying as much as possible, and extending the term whenever possible.

People like Lin Haoran, who plan to wipe out all their debts, are extremely rare, if not unique.

But Lin Haoran did not directly reveal this plan.

It wasn't that he wanted to hide it, but rather that the time wasn't right.

There is no benefit in prematurely revealing one's debt settlement plan before Kirk Koccrian has fully exited and the remaining shares have been acquired.

Lin Haoran smiled and said, "Mr. Kecorian, thank you for your kind advice, but I have my own plans. Don't worry, I'm not the kind of person who acts impulsively or without considering the consequences. I have the ability to handle this."

Upon hearing this, Kirk Kerkorian stopped trying to persuade him.

Anyway, once the shares are sold, MGM will no longer be his concern. Whatever Lin Haoran does is his own business; whether he makes a profit or a loss is none of his concern.

His words were merely an instinctive reaction to a relationship that had lasted for over a decade; once he finished speaking, he let it go.

“Alright, Mr. Lin, it’s good that you have a plan.” Kirk Kocorian waved his hand, his tone returning to its previous cheerfulness. “Since you’ve decided to privatize, I’ll tell you everything I know and pave the way for you. I can also help you contact these shareholders.”

He took out the small notebook he always carried with him from the inside pocket of his suit, glanced at it, and frowned slightly: "As for MGM Studios, apart from the 47% stake I hold, the remaining shares are mainly distributed among six institutions."

Fidelity Investments holds 8.8%, making it the largest shareholder; T. Rowe Price holds 6.2%, State Street holds 5.4%; the remaining three are small and medium-sized institutions, each holding no more than 3%.

As for the remaining shares, MGM Studios is a New York Stock Exchange listed company, so strictly speaking, the remaining shares are in the hands of retail investors and can be repurchased through the secondary market.

Given MGM's current declining performance and losses, these institutions and retail investors are eager for someone to buy their shares. If your offer is reasonable, they won't create obstacles, and the acquisition shouldn't be too difficult.

"As for MGM Grand Hotel, it is more difficult to completely privatize it than MGM Studios. MGM Grand Hotel has extremely high profits every year, and its dividends are naturally high as well. Many people come here for the dividends from MGM Grand Hotel."

Most of these shareholders are long-term holders and are not sensitive to stock price fluctuations, but they are very sensitive to dividends. They will not easily sell if your offer cannot compensate for their dividend losses over the next few years.

Kirk Kocorian turned a page in his notebook and continued, "At the MGM Grand Hotel, besides the 52% I have, the remaining 48% is distributed among more than a dozen institutions."

The largest is Vanguard Group, which holds 6.5%; followed by State Street Bank, which holds 4.8%; the rest are very dispersed, with none exceeding 3%.

In addition, approximately 15% of the shares are held by retail investors through various brokerage firms.

"Most of these institutional investors are here for the dividends. MGM Grand Hotel's annual dividends are stable, and the yield is much higher than that of government bonds, so they are reluctant to sell."

If you want to buy back their shares, you'll definitely need to pay a premium; otherwise, privatization wouldn't be so easy.

Lin Haoran listened attentively, occasionally jotting down key information in his notebook.

This information was very useful to him, giving him a clear understanding of the upcoming acquisition.

Of course, he didn't intend to personally handle the privatization of these two companies.

With a professional financial institution like Citibank around, he only needs to provide the funds, and the rest can be handled by a professional team.

The acquisition of MGM has been agreed upon, and there is no need for the two sides to continue negotiations.

With John Reed in attendance, the two signed the sale agreement, and John Reed also signed a guarantee agreement on behalf of Citibank, providing escrow and performance guarantees for the transaction.

After signing the contract, Kirk Kocorian tossed his pen onto the table, leaned back in his chair, and let out a long sigh, as if a heavy burden had been lifted from his shoulders.

His gaze lingered on the contract for a few seconds, then he looked up at Lin Haoran with a very complicated expression. After all, he had managed MGM for over a decade, and he had single-handedly created the MGM Grand Hotel. Now that he was really handing over the company, the reluctance in his heart was unimaginable.

“Mr. Lin, MGM is yours from now on.” His voice was lower than before, carrying an indescribable emotion. “Fourteen years of hard work, just like that, I’m handing it over. To be honest, I have mixed feelings right now. I feel relieved, but also empty.”

Lin Haoran didn't reply, but simply nodded slightly.

He understands that feeling.

It's impossible for someone who has run a business for fourteen years not to feel emotional when they have to hand it over to someone else, like a child they've raised themselves.

Kirk Kocorian picked up his whiskey glass, downed the last drop in one gulp, and then placed the glass on the table with a crisp sound.

He stood up, stretched his stiff back, and the complex emotions on his face gradually faded, replaced by a sense of relief.

"Come on, Mr. Lin, Mr. Reed, I'll treat you to dinner." His tone returned to its previous cheerfulness. "Although the MGM restaurants can't compare to the Michelin-starred ones in Paris, they are still among the best in Las Vegas."

This meal is a welcome dinner for the new employer, hosted by my former employer.

"Then I'll have to trouble you," Lin Haoran said.

The three of them left the conference room and took the elevator down to the second floor.

Kirk Kocorian led them into a high-class restaurant called "Lion's Hall".

The restaurant is small, with only a dozen or so tables, but the decor is extremely sophisticated.

Several movie posters from Hollywood's golden age hung on the dark red walls, with classic scenes from "The Wizard of Oz," "Gone with the Wind," and "Ben-Hur" appearing particularly charming under the soft lighting.

The crystal chandelier cast a warm glow, and each table was adorned with vibrant fresh flowers and silver candlesticks, while a faint aroma of champagne filled the air.

The restaurant manager saw Kirk Koccorian and immediately came to greet them, personally leading them to a table by the window.

From here, you can see the Las Vegas Strip at night. The neon lights stream in through the floor-to-ceiling windows, creating a beautiful interplay with the candlelight inside the restaurant.

Kirk Kocorian picked up the menu, didn't even look at it, and said directly to the waiter, "Three chef's set meals, with my 62 Latour, let it decanted first."

The waiter responded and left.

Lin Haoran leaned back in his chair, his gaze sweeping across the restaurant.

At this time, the restaurant was already quite full of customers, including ladies in evening gowns and gentlemen in suits. Everyone was talking in hushed tones, and the sound of cutlery clinking against plates echoed in the air.

Once the handover is complete, everything here will belong to him, including the restaurant, the tableware, and the guests who are dining there.

Of course, you can't keep customers' hearts, but you can keep their spending.

“That table over there is occupied by a Hollywood producer,” Kirk Kocorian said, pointing to a table in the corner. “He comes here often and we’re old acquaintances.”

He's always wanted to buy some film rights from me to produce television broadcasts and home videos. When you take over the film business, you can get in touch with him more often; he's got a knack for copyright management.

Lin Haoran followed his gaze and saw a white man in his early thirties sitting in the corner, wearing a dark blue casual suit, talking quietly to the woman opposite him.

The man seemed to sense Lin Haoran's gaze, looked up, saw Kirk Koccorian, and raised his glass in a gesture of greeting with a smile.

Kirk Kocorian also raised his glass in a toast from afar.

“His name is Harvey Weinstein. He started out in independent film distribution and has a lot of connections.” Kirk Kocorian put down his glass, speaking casually. “This guy has connections in both the legitimate and underworld circles.”

Be careful when dealing with him. He may act like a brother to you on the surface, but he might be plotting against you behind your back. However, there's no denying that he's a capable person. If you entrust your film to him for distribution, the box office will increase by 30%.

Lin Haoran felt a slight stirring in his heart when he heard the name "Harvey Weinstein".

This name is infamous in another world, but in 1983, he was just an up-and-coming independent film distributor, more than a decade away from his later peak of power.

Lin Haoran nodded calmly, without saying anything more.

As night falls, through the restaurant's floor-to-ceiling windows, you can see the neon lights on the Las Vegas Strip gradually lighting up, turning the entire street into a dazzling sea of ​​lights.

In the distance, the searchlights of the Pyramid Hotel pierced the night sky, the Eiffel Tower at the Paris Hotel shimmered with romantic light, and the golden lion at the entrance of the MGM Grand appeared even more majestic and imposing under the lights.

Lin Haoran held his wine glass, his gaze falling on the golden lion, and a feeling he couldn't quite describe welled up inside him.

Soon, this hotel and this lion will both become part of his business empire.

After dinner, Kirk Kocorian personally escorted them back to their pre-arranged hotel suite.

At the elevator entrance, he shook Lin Haoran's hand, hesitated for a moment, and finally just patted him on the shoulder, said "Get some rest," and then turned and left.

Lin Haoran watched his retreating figure, feeling a mix of emotions.

This veteran businessman, who had dominated the business world for decades, now appeared somewhat desolate from behind.

Fourteen years of hard work, to just let go of it like that—not everyone has that kind of courage.

Back in the suite, Liu Xiaoli was watching TV in the living room. When she saw him come in, she immediately stood up.

"Boss, you're back. How did the talks go?"

Lin Haoran sat down on the sofa, loosened his tie, took the hot tea that Liu Xiaoli handed him, and took a sip.

The Pu'er tea was at the perfect temperature, neither too hot nor too cold, clearly brewed and left to cool in advance; it was tea brought from Hong Kong.

"It's done." He leaned back on the sofa, his tone flat, as if it were just a small, ordinary deal. "The contract is signed, and MGM is mine now."

Liu Xiaoli's eyes widened in surprise, and she covered her mouth with her hands: "Really? That's wonderful! Boss, you're amazing!"

Lin Haoran smiled but didn't say anything more.

What he needs to consider now is how to take over MGM.

This is no small company. Both MGM Studios and MGM Grand Hotel are large enterprises with thousands of employees and complex operations. A slight misstep could cause chaos and lead to a business downturn.

Fortunately, Kirk Kocorian agreed to remain as an advisor for a month, which is a crucial window of opportunity.

With him in charge, the employees won't feel anxious because of the change of boss, and the management team can make a smooth transition.

What Lin Haoran needs to do is to place his management team in place within this month and firmly grasp the core departments such as finance, human resources, and legal affairs.

As for the original team, those who are suitable will stay, and those who are not will be fired. It's that simple.

Unfortunately, his base of operations is in Hong Kong, which is too far from the United States, making personnel relocation too troublesome.

If MGM were located in Hong Kong, he wouldn't have such troubles; he could simply transfer his best personnel from the other major groups under his umbrella.

But thinking about these things now is useless; distant water can't quench a nearby fire.

MGM is an American company. Its film business is in Los Angeles, and its hotel business is in Nevada cities such as Las Vegas and Reno. It needs to manage Americans with Americans to reassure its employees and customers.

It is different from Universal Investment Company, which was essentially moved from Hong Kong, and its core employees are all from Hong Kong.

MGM, on the other hand, is a large American corporation with all its employees being Americans. Bringing their Hong Kong team over would only lead to problems due to language barriers and cultural differences. (End of Chapter)