Hong Kong 1980: The Savage Era

Chapter 287 288 [Yihe Relocation]

"Ah Hong, now Wheelock Shipping Company alone has a debt of 21.8 billion yuan. Together with the debt of Po Fook Development Company, the total debt exceeds 25 billion yuan. Fortunately, real estate companies such as Real Estate Investment Trust and Federal Development and other industries are doing well, otherwise it would be really troublesome." Cheng Yutong felt a little scalp tingling when he saw the debt of Wheelock Shipping Company.

In fact, the real estate company still has debts on its accounts, and other industrial companies also have debts, but it does not affect normal operations.

However, if we ask them to help sort out the debts of Wheelock Shipping and Po Fook Development, those companies are certainly unwilling to do so, so this requires the shipping company and Po Fook Development to reduce the number of ships, or directly go bankrupt.

The latter measure will naturally not be adopted, otherwise it will seriously damage Wheelock's position in the shipping industry.

"Now we can only reduce the number of ships and then sell some assets." Luo Qihong said, "If we raise funds through rights issue, shareholders will definitely not respond."

No one would throw money into a company that is heavily in debt.

"The real estate company is the most solid asset of Wheelock at present. If it is lost, it is very likely that the whole line will collapse, so we can only sell non-real estate assets." Cheng Yutong looked at Luo Qihong and asked, "How much money do you plan to use to acquire Lane Crawford Development?"

"Wheelock currently holds a 49.7% stake in Lane Crawford Development, with a market value of 13 billion yuan. I plan to acquire it based on the market value." Luo Qihong explained, "I have studied it. Lane Crawford Development is the only high-end department store in Hong Kong, but the British-owned Inchcape Group still has a lot of market share. In addition, high-end department stores target a small number of people, so it is difficult for them to develop significantly."

In fact, in Luo Qihong's eyes, the most valuable assets of Lane Crawford Development Company are five shopping malls and the Lane Crawford Building in Central. The properties are already worth 5 to 6 million yuan, accounting for half of the total assets.

"That's about 6 million, which can reduce some of the shipping company's debts, but it's still not enough." Cheng Yutong began to get to the point. "When Zhang Yuliang was in charge of the real estate trust company, he raised 8 billion yuan in funds. In addition to purchasing his family's properties, there was still 10 million yuan left. I want to lend this money to the shipping company first to pay off the debt. What do you think?"

It is obvious that Cheng Yu-tung wants to keep the ships under his control and maintain the current scale of Wheelock Group.

"The shareholders of the real estate trust company may not agree, and may even strongly oppose it." Luo Qihong said, "John Madden wanted to use this money at the beginning, but was rejected by Zhang Yuliang. The shareholders of the real estate trust company all know it."

Luo Qihong politely declined. He thought that it was not advisable to use healthy flesh to heal a rotten sore. He also knew that the shipping industry would not improve until the 90s. There were still 6 or 7 years left. How could he do that?
"Why not sell some of the interests in the Wheelock Building in Central to a property trust company in exchange for the 4 million yuan in funds for turnover, and then redeem it after the shipping company's situation improves?" Luo Qihong made a new suggestion, which was considered a way for Cheng Yu-tung to step down.

Zheng Jiachun hurriedly said, "This is a good idea. The shareholders should not object."

The real estate trust company will fall back into the hands of the Zheng family sooner or later. Now it is just a left-hand and right-hand transaction, and no one will suffer.

"Okay, let's decide this first." Cheng Yutong also thought it was a good idea. At least it wouldn't give people any reason to criticize him.

Cheng Yutong pondered for a moment, then continued, "The total is 11 billion yuan, and there is a debt of 10 billion yuan. Ah Hong, do you have any other ideas?"

Luo Qihong thought for a moment and advised, "Uncle Tong, the shipping company has too many ships, and the funds for daily maintenance are not small. We should reduce some ships and let the shipping company and Baofu Development handle the turnover first."

Cheng Yu-tung sighed and said, "In fact, I still think that the shipping industry will pick up around 86."

Luo Qihong continued to persuade him, "What if the economy doesn't recover? The shipping company will be hopeless at that time, and it will also drag down the entire Wheelock Group. Uncle Tong, you often teach us to operate cautiously, but this is inconsistent with your style, isn't it?"

Hearing this, Cheng Yutong smiled bitterly and said, "I am obsessed. Then let's start reducing the number of ships in large quantities. Ah Hong, how many do you think are appropriate?"

"All shipping companies should reduce the number of ships by 6%." Luo Qihong said, staring at Zheng Yutong's face.

"Achun, what do you think?" Cheng Yutong asked his son casually.

Zheng Jiachun nodded in embarrassment. In fact, he agreed with Luo Qihong's suggestion, but he still subconsciously protected Zheng Yutong's face. "Okay, then reduce the number of ships by 6%, and use all the funds to repay debts." Zheng Yutong said with a sigh of relief. The decision had been made, and the heavy stone in his heart was relieved a lot.

Luo Qihong added, "After reducing the fleet by 6%, the company's market value will drop to around 30 billion yuan, but the proportion of its real estate will increase. When the Sino-British negotiations are over, the market value will definitely soar."

"When will the acquisition funds for Lane Crawford Development arrive?" asked Cheng Yu-tung.

"Within a month!" Luo Qihong said, "Hexiang Trading Company has limited funds, and I need to contribute about 3 million yuan personally, so you need to give me some time to raise funds."

"No problem! Then let's deal with the property trust company and ship reduction issues first." Cheng Yutong said.

As a result, the shipping companies under Wheelock Group began to reduce the number of ships. Although the losses from reducing the number of ships at this time were huge, it was inevitable, otherwise it would drag down the entire Wheelock Group.

This massive action to reduce the number of ships shocked the outside world, but many people also felt it was reasonable.

If the shipping industry continues to decline, Wheelock's losses will only grow bigger and bigger, and eventually it will be beyond recovery. At this time, the best strategy is to cut off the arm to survive.

Wednesday, May 3

Jardine Matheson's sudden announcement of moving its registration to Bermuda caused a huge shock.

The outside world began to talk about it, and many businessmen believed that Jardine Matheson had smelled some incredible news. They immediately wanted to follow suit, but they also wanted to wait and see, find out the situation before taking action, rather than acting rashly.

Dean Securities Investment Company
Bai Jinyan's face was not good. "Jardine Matheson is a leading enterprise in Hong Kong. This will definitely have a huge impact on the stock market. I don't know how much the Hang Seng Index will fall tomorrow."

Luo Qihong smiled bitterly and said, "It seems that Simon Keswick must have heard some great news from his ancestral home (England), which is why he reacted so strongly."

Bai Jinyan's eyes widened in vain. "Are you saying that the British are doomed to lose?"

"Isn't this very obvious? The people in Jardine Matheson Company are not just sitting there to do nothing." Luo Qihong said.

Bai Jinyan thought of the rumors about the mainland, and suddenly felt a chill in his heart, and asked, "Should we follow suit?"

Luo Qihong immediately waved his hand and said, "Not for the time being, we'll talk about it later. Our roots are all in Hong Kong now, unlike Jardine Matheson, which has a lot of assets overseas."

"That's true. It would be a huge loss to evacuate now." Bai Jinyan changed the subject and said, "What about Jardine Matheson's land company? Will it also be relocated to Bermuda?"

"It should be." Luo Qihong nodded. "The important thing is that Jardine Matheson has started a trend of relocation, which has a very bad impact on the Hong Kong stock market."

"Should we do something tomorrow?"

"No need, let's just wait and see." Luo Qihong said calmly, "We only have a small amount of funds in the Hong Kong stock market, so there's no need to worry too much. Maybe this isn't a bad thing for us."

(End of this chapter)