Hong Kong 1980: The Savage Era

Chapter 127 [Just a Minor Setback]

After entering September, the rainfall in Hong Kong began to decrease and the weather became hot and humid.

The temperature after autumn is not much different from the high temperatures in July and August. If people move a little, they will sweat all over.

What Luo Qihong could not have expected was that the share price of Hongpu Chemical Company fell to 1 cent, and the bank was ready to let Hongpu Chemical Company go bankrupt and liquidate its assets.

Luo Qihong immediately approached Liang Botao to discuss the acquisition of Hongpu Chemical Company.

In the reception room, Liang Botao was silent for a while after listening to Luo Qihong's story, and then said, "Mr. Luo, the biggest difficulty in this acquisition case is how to convince the bank to treat the pledged loans of Hongpu Chemical Company as bad debts. The problem now is that the bank can recover some of the principal from the pledged properties, which is quite different from the bad debts you mentioned."

"I have already found out that some of the properties are cross-collateralized. The banks will definitely not be able to recover the principal for these loans, and the Independent Commission Against Corruption is already preparing to investigate. If no one takes over Hongpu Chemical, these properties will be difficult to sell in a short period of time." Luo Qihong handed a document to Liang Botao.

"This is a good entry point, but I suggest that Mr. Luo should not make all the loans bad debts, but half of the loans bad debts. In this way, banks will be more receptive. The ICAC investigation has not yet started, which may save a lot of trouble." Liang Botao made suggestions from a professional perspective.

Luo Qihong thought about it from the perspective of loan repayment, and believed that he could first deal with the "bad debts" and then use the "layer-by-layer unwinding" method to repay the loan, which should be able to alleviate the current predicament. If he then sold the patent, he might be able to retain nearly 5% of his assets.

"Okay! Then let's contact the Bank of East Asia, HSBC and Standard Chartered Bank first to settle the bad debt issue, and then discuss the shares of Hongpu Chemical Company in their hands." Luo Qihong nodded.

"Well, the three banks hold 35% of the shares, which is 3 million shares in total. The current share price of Hongpu Chemical Company is 5 cent, and 1 million yuan of funds are needed," said Liang Botao.

Luo Qihong smiled evilly and said, "Mr. Liang, it is true that the share price is 1 cent, but I hope to buy the shares held by the bank at a price of 5 cents per share. Do you think the bank will agree?"

Liang Botao was slightly stunned, thinking to himself, "As expected of a leader of the younger generation in Hong Kong, he still wants to continue to squeeze the interests of the bank."

"It shouldn't be a big problem. After all, the bulk of the bank's profits are not in these stocks," said Liang Botao.

In fact, Luo Qihong originally did not care about the more than one million, but now he unexpectedly acquired a residential tenement building in Ho Man Tin, which destroyed the original plan. Now all the funds of Zhaoan Real Estate Company are in the stock market, and it is really difficult to mobilize funds to acquire the residential tenement building, leaving Paramount Company with more funds to acquire Hongpu Chemical.

Luo Qihong originally wanted to visit the Bank of East Asia first because Luo Qihong had cooperated with Li Fushu of the Bank of East Asia before. He could persuade Li Fushu to open a back door for him from the perspective of Paramount Company, which would also facilitate the subsequent negotiations with Standard Chartered Bank and HSBC, after all, there were successful examples.

However, Liang Botao objected on the grounds that HSBC held a 20% stake in Hongpu Chemical Company and the largest number of mortgage loans. If he could not convince HSBC first, it would be difficult to achieve his goal even if he convinced Standard Chartered Bank and Bank of East Asia.

So, the first bank they visited was HSBC.

Thanks to Zhang Taotao's relationship, HSBC's Vice President, Reis, personally received the two.

Reis is a genuine British person. Like the boss Shen Bi, he once served in the army and has a very strong style.

Of course, Luo Qihong and the others also did their homework, learned about Reis's basic information, and discussed how to deal with Reis.

"Manager Zhang (Zhang Taotao) has already informed me of the purpose of your visit, gentlemen." After letting the secretary go out, Reis poured himself a cup of coffee. "Hongpu Chemical Company is on the verge of bankruptcy. As the largest creditor of Hongpu Chemical Company, HSBC has the right to apply to the court for bankruptcy proceedings against Hongpu Chemical Company. How do you two gentlemen plan to get the most benefits for HSBC?"

Luo Qihong and Liang Botao looked at each other and said seriously, "For HSBC, the biggest loss would be to let Hongpu Chemicals go bankrupt. Mr. Reiss, you can take a look at our plan first. If you think it is feasible, we can discuss it further."

In fact, the three people present are all elites. No matter how nice the words sound, it is useless without sufficient benefits.

Liang Botao was a little puzzled by Luo Qihong's "unconventional behavior", but considering that Luo Qihong was the protagonist of this scene, he suppressed his curiosity.

Seeing that Leis had read almost everything, Luo Qihong continued, "There is an overlap between some of Hongpu Chemical Company's pledged loans at your bank, plus Hongpu Chemical Company's 20% equity loan, your bank's loss is greater than expected. According to my calculations, your bank will lose about 1 million yuan."

"But if you follow my plan, plus the interest that Hongpu Chemical Company needs to pay, your bank's loss can be reduced to 8 million yuan, or even less."

"Mr. Reiss, my Paramount Company was a real estate company on the verge of bankruptcy last year, but after my careful management, it not only turned losses into profits, but also has a market value of more than 5 million yuan. It is also rising well now. I believe I can maximize the benefits for your bank."

Reis turned his head and thought for a moment, then said, "There is no problem with the plan, but I would prefer that HSBC continue to hold 10% of Hongpu Chemical Company's shares, and the 10% of shares sold to Paramount must be traded at the market price."

Luo Qihong's eyes flickered, and he smiled and said, "HSBC Bank retains 10% of the shares. This is a recognition of me and Paramount Company. I am very honored! However, I cannot agree to the request to trade 10% of the shares at the market price. The reason is that Paramount Company has taken on a huge risk by taking over Hongpu Chemical Company. If it loses 10% of the shares, Paramount Company will need to spend a lot of money to purchase shares from the stock market."

Leis smiled and said, "Luo Sheng is very eloquent. I also have to protect the interests of the bank."

Now it was Liang Botao's turn to speak. "Mr. Reis, the ICAC has intervened in the investigation. HSBC wants to force Hongpu Chemical Company into bankruptcy, but I'm afraid the court will not approve it. The current local market situation is not good. If there is a decline, HSBC will suffer greater losses. Luo Sheng's management ability is obvious to all, and the rise of Paramount Company is the best evidence."

"Okay." Reiss smiled and shrugged. "Congratulations on convincing me. Your plan is indeed in the interests of the bank and is better than filing for bankruptcy."

After staying in the office for another 5 minutes, the two went to Standard Chartered Bank to persuade it to agree to their proposal. However, they ran into a tough guy who wanted to get something out of Paramount.

"I think you two have already discussed it with HSBC, and the plan should not be much different. I also don't believe that Luo Sheng will stop without the 5% stake in Hongpu Chemical Company held by Standard Chartered Bank and the loan of 1 million yuan?" Liu Jiehui, vice president of Standard Chartered Bank, said shamelessly.

Hearing this, Luo Qihong and Liang Botao's faces suddenly turned ugly. Who could have thought that Standard Chartered Bank would be so shameless.

In a flash, Luo Qihong sneered and said, "What Mr. Liu said makes sense, but I only reached a verbal agreement with HSBC. We haven't signed a contract yet, and we can cancel it at any time."

"Moreover, I can work with HSBC and Bank of East Asia to have Hongpu Chemicals issue a large number of new shares, so that the equity held by your bank will be infinitely diluted. I can even let Hongpu Chemicals go bankrupt first, and then I can slowly take over. It's just that the procedures are a bit more complicated."

After saying that, Luo Qihong immediately called out to Liang Botao, "Mr. Liang, let's go."

Liu Jiehui thought Luo Qihong was playing hard to get until 2 minutes after Luo Qihong and Liang Botao left. Liu Jiehui began to realize something, picked up the phone, and asked his secretary to chase after Luo Qihong and Liang Botao.

At the elevator door, the beautiful secretary ran out in high heels and said anxiously, "Mr. Luo, Mr. Liang, Vice President Liu asks you to go back and continue the discussion."

Luo Qihong waved his hand expressionlessly. "No need. Since Standard Chartered Bank has no sincerity, it is better to let Hongpu Chemical Company go bankrupt. I can just find another project."

The beautiful secretary wanted to say something else, but the elevator door closed automatically, so she had no choice but to go back and report.

"Luo Sheng, do you really want to give up this project?" Liang Botao asked.

Luo Qihong smiled and said, "Of course not! If Liu Jiehui doesn't come to talk to me in person, I will let the reporters report this matter. I want to see if Liu Jiehui is willing to bear the pressure of public opinion that this will bring."

Liang Botao shook his head. "It's hard to say! In Hong Kong, it's common for big stores to bully customers. The stronger party usually ignores such things."

Luo Qihong smiled indifferently and said, "It still has some effect. It's worth spending tens of thousands of dollars to vent my anger."

"Let's go meet the Bank of East Asia." Luo Qihong walked out of the elevator.

"This was supposed to be a win-win project, but Liu Jiehui was so greedy. He is really not suitable for a career in banking," Liang Botao complained.

"This is good. I can do it openly and dilute the equity a lot. The stock price won't go up, but it won't have much impact on us. We can even make more profit." Luo Qihong said cunningly.

This was naturally what he had just figured out. New shares could be issued at a low price, especially when Hongpu Chemical Company was on the verge of bankruptcy.

He had already made up his mind that once he took over Hongpu Chemical Company, he would immediately issue 1 million new shares, exclusively to him and HSBC at a price of 1 cents per share. This would allow Hongpu Chemical Company to have some capital turnover, while also increasing its shareholding and strengthening its control over the company.

When the stock price of Hongpu Chemical Company rises to a certain level, Luo Qihong will sell the stock, suppress the stock price, and then issue new shares to earn the difference.

After driving to the Bank of East Asia, Luo Qihong explained his purpose. Li Fushu immediately agreed after reading the proposal. After all, this would be beneficial to both the Bank of East Asia and the Chinese Estates Company, and could be considered a win-win situation.

At this point, Luo Qihong had gained control of Hongpu Chemical Company.

While steering, Luo Qihong said to Liang Botao, "Mr. Liang, once Paramount has signed the contract with HSBC and Bank of East Asia, you must help me announce the acquisition of Hongpu Chemical Company."

Liang Botao pondered for a moment and said, "Does Luo Sheng want to use the reputation of the acquisition to raise the stock price? You don't want to issue new shares, do you?"

"The cash turnover of Paramount Company is not very good. I need to raise the stock price to recover some funds to facilitate other projects of Paramount Company." Luo Qihong explained truthfully.

"How many shares of Hongpu Chemical Company does Luo Sheng hold?" Liang Botao asked. Including the equity of HSBC and Bank of East Asia, he only holds 20% of the shares.

"I don't have any shares yet. I have already understood the situation of the stock market. As long as I have sufficient funds, it will not be a problem to absorb 1% of the shares within three days." Luo Qihong said.

"That's still 60%. Luo Sheng should still pay attention to the proportion of his shares. It's best not to be less than 40%." Liang Botao thought of something and said, "Luo Sheng can sign a support agreement with HSBC to prevent HSBC from supporting others to control Hongpu Chemical."

"Okay!" Luo Qihong said, "In fact, I have already talked to some small shareholders of Hongpu Chemical Company. They are all willing to sell their shares at the market price, which is about 12% of the shares."

"That would be the best." Liang Botao nodded. Luo Qihong did have a backup plan.

Five days later, Luo Qihong signed an agreement with HSBC and Bank of East Asia on behalf of Paramount to acquire shares of Hongpu Chemical. Then, CITIC Capital Financial Company announced on behalf of Paramount that it would acquire Hongpu Chemical.

(End of this chapter)