Hong Kong 1980: The Savage Era

Chapter 116 [Unequal Agreement]

Siu On Real Estate Company Office

Anleyuan Building has truly belonged to Zhaoan Real Estate Company, but only 4% of the payment has been made. The remaining 6% (a total of 1.26 million yuan) was loaned from the bank with an annual interest rate of 10%, and the monthly interest payment is 1 million yuan.

The current rent of On Le Yuan Building is $12 per square foot, and the vacancy rate is as low as 0.5%. The current monthly rental income is $1 million, which is enough to pay the monthly interest.

而兆安地产公司的市值是1亿2千万元左右，资产只有两幢商业大厦，价值2亿7千8百万元，公司负债1亿7千1百万元，净资产1亿零7百万元，与市值相差不大。

The current task of Zhaoan Real Estate Company is to make money to reduce its debt ratio. The current debt ratio is 61.5%. According to Luo Qihong's plan, the 4 million mortgage loan of Lu Dao Building in Wan Chai must be resolved first, so that the debt ratio can be reduced to 5%.

However, apart from the investment in the stock market, Zhaoan Real Estate Company only had 1 million yuan in cash in its account, which was barely enough to maintain the company's daily turnover.

It is obviously unlikely to get some cash flow from next month's rent, as most of it has been taken away by paying the loan interest.

Therefore, Luo Qihong could only find ways to make more profits for Zhaoan Real Estate Company from the stock market.

Why doesn’t Zhaoan Real Estate Company launch a fundraising and share offering plan?
The reason is that Zhaoan Real Estate Company has too much debt and its market value is too low. Even if it raises funds or issues shares, it will not get too much money. In addition, it is not well-known, so the fundraising and share offering may not be successful.

Moreover, as a major shareholder, Luo Qihong needs to provide half of the shares, and he has other plans for the 1 million yuan in his hand.

A private room at the Mandarin Oriental Hotel in Central

Sitting next to Luo Qihong is an old man with a few age spots, few wrinkles, and rosy skin. He has a square face and it is not difficult to tell that he was a handsome man when he was young.

The old man is Li Fushu from the Li Guanchun family, who served as the chairman of Bank of East Asia, director of Chinese Estates Holdings and China Entertainment Holdings, and director of China Gas Company.

This was a guest that Luo Qihong had to make several appointments to meet.

Li Fushu is a big shot in Hong Kong and has a good reputation, so it is not easy for Luo Qihong to make an appointment with him.

"Mr. Li, I know your time is precious, so I will just state my purpose." Luo Qihong personally poured a cup of tea for Li Fushu and said with a smile, "I want to buy the 1 million shares of China Gas Company held by Chinese Estates Holdings at a high price. I wonder if Chinese Estates Holdings is willing to part with them?"

"I've heard from the secretary about Mr. Luo's purpose." Li Fushu smiled. "Mr. Luo, please name a price first. Let's see if there's any need for us to continue the conversation."

"How about a 3% premium?" Luo Qihong had carefully considered this opening premium.

Li Fushu took a sip of tea and said, "3% is too low. How about I come up with a plan and see if Luo Sheng can accept it?"

"The Central On Lok Yuen Building was exchanged for 1 million shares of China Gas Company, of which On Lok Yuen Building was purchased at the original price, and China Gas Company shares were purchased at a 5% premium."

Luo Qihong's face darkened. China Gas Company was important, and On Le Yuan Building was equally important. Moreover, Chinese Estates Holdings only held 5% of the shares of China Gas. If it was more, he would definitely agree to this plan.

"Mr. Li, do you have any other plans? There are many commercial buildings similar to the On Lok Yuen Building in Central, and Chinese Estates Holdings can directly acquire them." Luo Qihong said.

"Since Mr. Luo is unwilling, let me come up with another plan." Li Fushu said, "Chinese Estates is willing to acquire the Paramount Restaurant Company at the market price, but Mr. Luo needs to purchase another commercial building in Central for the Paramount Restaurant Company and control the Paramount Restaurant Company's debt within 6 million yuan."

Luo Qihong frowned. This was the first time in his life that he had encountered such a replacement requirement. Acquiring a commercial building in Central was not a problem. The key was how to repay the debt for acquiring the commercial building.

It seems that the repayment can be made through rights issue, but in fact it is quite difficult because Paramount Group has just completed its rights issue.

"Is there a time limit?" Luo Qihong thought that if he refused again, he would not be able to get the 5% equity of China Gas Company. "The transaction must be completed before 82," Li Fushu said with a smile.

"Can we replace the Central commercial building with Wan Chai commercial building?" Luo Qihong still wanted to give it a try.

Li Fushu shook his head and said, "No, and apart from the two small commercial buildings in downtown Kowloon that were recently acquired, Luo Sheng is not allowed to touch the other assets of the Paramount Restaurant Company. He must ensure that these assets are under the Paramount Restaurant Company during the transaction."

Luo Qihong pondered for a long time before he looked up at Li Fushu and said, "Okay, I agree, but Chinese Estates must immediately sell me 1 million shares of China Gas."

"Okay, but we have to sign an agreement. If Mr. Luo cannot complete the contract within the specified time, Chinese Estates Holdings will not only have to take back the 1 million shares of China Gas Company, but will also not refund the cash that Mr. Luo has already paid." Li Fushu smiled rather sinisterly.

What a demanding request! This is a nakedly unequal treaty!

"Okay! Then when do we sign the contract?" Luo Qihong wanted to give it a try. He certainly had the confidence to complete the terms of the agreement.

"Wait a couple of days. Luo Sheng, try to prepare the funds for the 1 million shares of China Gas Company."

"Mr. Li, can I pay your company 1 million yuan first, and the rest will be paid within a week?" Luo Qihong said expressionlessly.

Li Fushu thought for a moment and said, "It should be no problem. If Luo Sheng needs a mortgage loan, Bank of East Asia can provide it for you, which can save you a lot of trouble."

"Okay, then let's have a happy cooperation!" Luo Qihong extended his hand towards Li Fusu.

"Happy cooperation!" Li Fushu stretched out his hand and shook it.

如今的中华煤气公司股价是10.8元，市值21.6亿元，拿下华人置业所持有的中华煤气公司1千万股股票需要1亿6千2百万元。

Luo Qihong only has 1 million yuan of it, which means he needs to borrow 2 million yuan, which is exactly 6% of the value of this batch of stocks.

After leaving the Mandarin Oriental Hotel, Luo Qihong calculated carefully and suddenly took a breath.

If calculated based on a 5% premium, he would need 11 billion yuan in cash to control China Gas Company, which is almost the market value of a medium-sized real estate company.

The combined personal assets of Paramount Group, Zhaoan Real Estate and Luo Qihong are less than 11 billion yuan, only 6% to 7% of that.

Fortunately, Luo Qihong did not agree with Li Fushu to set a limit on the market value of Paramount Company, otherwise he would have suffered a huge loss.

At this point, Luo Qihong can only take a gamble and focus all his energy on making profits for Paramount Company.

The next morning, Luo Qihong showed up at the office of Paramount Company, contrary to his usual behavior, and carefully sorted out the current situation of Paramount Company.

The Paramount Company owns a lot of properties, but the only ones that Luo Qihong can move are two newly acquired small commercial buildings in the urban area of ​​Kowloon, the Southeast Tenement Building and the Lee Fat Building.

Paramount Company has a debt of 6 million yuan, with a debt ratio of 9%, but the funds in its account are pitifully small.

Without sufficient capital, how could Luo Qihong meet Li Fushu's requirements? So Luo Qihong thought about selling Lifa Building. Although he could not make much profit from the sale of Lifa Building, Luo Qihong could raise some funds.

(End of this chapter)