Hong Kong 1980: The Savage Era

Chapter 381 382 [Intention Exposed]

Siu On Real Estate Company
The market value continues to rise, but the debt ratio is also rising sharply.

The original plan was to raise funds through rights issue to repay the debt, but unfortunately Dean Securities had already spent HK$30 billion on the acquisition and it was difficult for it to respond to the rights issue proposal.

"Boss, I'm not clear about the situation of Dean Securities Investment Company. Is it really that it can't even support a small-scale share offering plan?" Cheng Jianshen asked bravely.

Cheng Jianshen suggested to Luo Qihong at the end of last year that he should make so many plans with the two share offerings in 87 as the target, so he still wanted to give it a try.

Kang Wenyi and Chen Zhilong were also staring at Luo Qihong. This was a big cake and they both wanted to have a big piece.

Luo Qihong thought for a while and said, "A small-scale rights issue should be no problem. How about this? We can offer 5 share for every 1 shares and raise 10 billion yuan to repay the company's debts."

"The market is booming, isn't it a bit of a waste to use it to repay debts?" Kang Wenyi said, "If the company's assets are increased, the market value will definitely increase, which can also reduce the company's debt ratio."

Luo Qihong smiled and said, "No one can guarantee that the market will always be so prosperous. The sharp drop caused by the Sino-British negotiations in 82 caused the collapse of the prosperous Jianing Group. The sharp drop in small and medium-sized stocks in 85 caused many companies to suffer heavy losses. Each of these outbreaks was sudden."

"What we have to do is to ensure that the company can survive at all times. When the market is booming, the market value is high and there will be no problems. But what if the market is down? What if the debt ratio of Zhaoan Real Estate Company increases to more than 80%?"

Kang Wenyi remained silent. It was not that he didn't know, but under Luo Qihong's command, he thought that such a thing would not happen.

"Okay, it's decided that the 10 billion yuan raised will be used to repay debts." Luo Qihong made the decision, "The company still has some expiring futures contracts. How much money can be cashed out?"

Cheng Jianshen replied, "There are 5500 futures contracts. According to the current price, each contract can earn 1.8 yuan, which is 9900 million yuan, and the funds can be recovered by 2.64 million yuan."

"Let's discuss the use of this fund." Luo Qihong said.

"Swire Properties is selling its assets, among which high-end residential properties in the Mid-Levels are a good investment project," said Kang Wenyi.

The debt of the Hong Kong Land Development Co., Ltd. is still several billion yuan, and the acquisition of the Hong Kong Land Development Co., Ltd. has little to do with the funds on the Hong Kong Land Development Co., Ltd.'s books. However, this is ultimately an act of aiding the enemy.

Luo Qihong thought for a moment and refused, "The real estate market is booming now, and the prices will be very high. 2.64 million yuan may not be enough. If we borrow more money, then the claim of using the raised funds to repay the debt is tantamount to taking off pants to fart, and it may even cause a public relations crisis for the company. Let's talk about other projects."

"Why not invest in the stock market? Bank stocks have seen a good increase and are expected to rise by 30% by the end of the year," said Cheng Jianshen.

"Okay, then let's buy bank stocks." Luo Qihong agreed.

"Manager Kang, it's time to start cleaning up the company's scattered property investments. Clear out all properties outside the core properties within four months, including residential buildings that cannot be fully developed. All of them will be sold as pre-sale properties. Leave the undeveloped land behind," Luo Qihong instructed.

Kang Wenyi nodded "Yes!"

"Boss, will the property market fall again?" Cheng Jianshen asked.

So Luo Qihong told them about the situation in the American market.

"Then isn't it very dangerous for us to invest in bank stocks?" Cheng Jianshen became worried.

"Don't worry, someone will be keeping an eye on the situation in the United States. If there is any sign of trouble, I will notify you to sell all your shares." Luo Qihong waved his hand, indicating that there was no need to worry.

"Then can we take advantage of the high share price of Huaguang Real Estate Company and cash in on the profits?" Chen Zhilong suggested.

"How much Huaguang Real Estate shares do we currently hold?" Luo Qihong asked.

"It's close to 70%. If we sell to cash out, we can sell 30% and get back 6-7 million yuan." Cheng Jianshen said. "Sell 25% and keep 45%. The money we get back will be deposited in the bank to earn interest, and at the same time we can prepare for the stock market crash." Luo Qihong made a decision.

Chen Zhilong thought for a long time, and handed over the report, saying, "According to reliable information, the Hong Kong government is about to launch a tender for the Tuen Mun market. Will our Siu On Real Estate participate?"

Luo Qihong opened the report, which indicated that the minimum bidding price for this project was 15 billion yuan, and that was for the first phase. Including the construction costs, the entire project would require at least 35 billion yuan.

If the market is absolutely booming, Zhaoan Real Estate Company may be able to take out some funds and then borrow money from the bank, so taking on this project will not be a problem.

Unfortunately, the situation is now at an extremely bad critical point. There is still half a year before a stock market crash. I won’t die if I win this project, but I won’t be able to have an easy life either.

"I won't participate anymore. Let's give it to our colleagues. We can't have everything. We need to leave some for others and not be too overbearing." Luo Qihong said in a very high-sounding manner.

"What if a company wants to cooperate with us?" Chen Zhilong asked.

Luo Qihong pondered and said, "We can cooperate, but the equity we own cannot exceed 10%."

"Yes, I know what to do." Chen Zhilong said.

In fact, he had guessed from the boss's reaction just now that he would not participate, but such a good project could not be given up, so cooperation and sharing of interests was the best way.

Early November

The share price of Hong Kong Land Development Co., Ltd. inexplicably surged by 5%, attracting the attention of Hong Kong Land Development Co., Ltd.’s senior management and shareholders.

Generally speaking, this situation will only occur when someone is preparing to acquire the company. After all, the land company has not announced any good news.

Peregrine International Conference Room
Liang Botao personally distributed the documents to Huang Tingfang and his son and Luo Qihong and his wife. The atmosphere was very solemn.

"Our acquisition intention has been fully exposed. The top management of the Jardine Matheson Group is very likely discussing countermeasures, so we must speed up and try to catch the Jardine Matheson Group off guard. This will be in the greatest benefit for us." Liang Botao sat back in his seat.

"I think we should announce the acquisition of Hutchison Whampoa immediately, otherwise there will be more trouble down the road," said Huang Zhixiang.

"I agree!" Luo Qihong said, "If Mr. Huang has no objection, let's start discussing the purchase price."

"Okay, then let's start talking about the purchase price." Huang Tingfang said.

"The current share price of the Hong Kong Land Development is 6.3 yuan. According to previous acquisitions, a strong acquisition price is a 1% premium, and some people will even offer a 2% premium," said Liang Botao.

"I suggest a direct premium of 3%, which is 8.2 yuan. If Jardine Strategy Company exits, we should promptly raise the price to 10 yuan," Luo Qihong said. "Only if we always outperform Jardine Strategy Company can we gain the upper hand."

Huang Tingfang was not a generous person, but he had a lot of experience in business warfare. He said, "Mr. Liang, please follow Mr. Luo's advice and immediately initiate the acquisition of the Landmark Company."

"I think we have contacted the directors of the Landmark Company and bought their shares." Bai Jinyan said, "The Keswick family has controlled the Landmark Company for many years. Those directors do not support us. Instead of keeping them to help the enemy, it is better to get them out."

"Haha! Mrs. Luo is indeed a securities expert. Her words really woke me up." Huang Tingfang looked at Liang Botao and said, "Mr. Liang, do you have any channels?"

"Not yet. I don't know the foreigners in the Jardine Matheson Company, but I can try other means. It won't be a problem to contact those foreigners." Liang Botao said.

(End of this chapter)