Rebirth in Hong Kong: From Dessert Shop to Industrial Empire

Chapter 198 Right of First Refusal (Seeking monthly votes, recommendations, and subscriptions!)

The next morning at 9:30, in the Hutchison Whampoa Group conference room.

The directors took their seats one after another around the long conference table.

In addition to Chairman Wei Li and several executive directors representing the management team, there were also a few faces that are rarely seen today.

Sir John Swire, Chairman of the Swire Group, and Sir John Newbridge, Head of Jardine Matheson, both came in person.

The two nodded slightly across the table, their expressions serious, revealing little emotion.

Clearly, the issue of temporarily adding directors to the board had touched a nerve after they received that anonymous letter.

Guided by Secretary Wei Li, Chen Bingwen entered the conference room on time.

He was wearing a dark suit today, his expression was calm, and he glanced at everyone present before sitting down in an empty seat to the right of Wei Li.

That was a seat reserved for him in advance.

Wei Li tapped the table lightly, announcing the start of the meeting.

"Distinguished directors, we are holding an emergency meeting today to review a proposal."

Wei Li stated directly, "According to the company's articles of association and the fact that Sugar Heart Capital Limited currently holds 10.8% of the company's shares, as the chairman of the board, I propose to add Mr. Chen Bingwen, a representative of Sugar Heart Capital, to the board of directors as an executive director."

Please review this.

The meeting room was quiet for a moment.

Shi Yadi spoke first: "Sugarheart Capital's shareholding ratio exceeds 10%, and its entry into the board of directors is in accordance with procedures."

Mr. Chen is young and promising, and the development of Chen's Foods is evident to all.

I have no objection.

He seemed supportive, but lacked enthusiasm; it was more like he was going through the motions.

Newman looked at Chen Bingwen and said, "Mr. Chen, Hutchison Whampoa's business is very complex, involving real estate, docks, and retail, which is very different from the food and beverage industry that you are familiar with."

As an executive director, you may be involved in specific decision-making in the future. Will you be able to balance this with your time and energy?

This question is direct and carries a hint of scrutiny.

Meeting his gaze, Chen Bingwen calmly replied, "Thank you for your concern, Sir Newbikini."

As a financial investor, Sugar Capital values ​​Hutchison Whampoa's long-term value and high-quality assets.

I will do my best to familiarize myself with the business, and when it comes to major decisions, I will prioritize the interests of the company and all shareholders and exercise my rights prudently.

The specific management work will naturally rely on Chairman Wei Li and the existing professional team.

His words were impeccable, both stating his position and reassuring the management.

The other directors were mostly representatives of the management team promoted by Wynn or spokespeople for minority shareholders. Seeing that the taipans of Swire and Jardine Matheson did not explicitly object, they all nodded in agreement.

Seeing this, Wei Li immediately said, "Since there are no objections, let's proceed with the vote."

Those who agree to appoint Mr. Chen Bingwen as an executive director, please raise your hands.

Apart from Shi Yadi and Newbijian, who merely nodded slightly, all the other directors raised their hands.

"The motion has been passed," Wei Li announced quickly. "The secretariat will immediately complete the relevant procedures and report to the exchange and the securities regulatory department after the meeting."

The whole process went surprisingly smoothly.

Chen Bingwen knew that this was not because he was so popular, but because the current situation was delicate.

Swire and Jardine Matheson were pleased to see someone come in to check HSBC, while Wyman needed allies, and the other junior directors were unwilling to easily offend any party.

The meeting moved on to the next topic.

Wei Li coughed lightly, his expression turning serious. "Everyone, there have been many rumors circulating in the market lately about potential changes in the company's shareholding structure."

He paused, his gaze sweeping over Shi Yadi and Newbijian. "Although it is unconfirmed, for the sake of the company's stability and to prevent any unforeseen circumstances, I suggest adding a supplementary clause to the board meeting rules."

Upon hearing this, everyone looked at him.

“The main content of the terms is,” W.R. Wright stated clearly, “any shareholder holding more than 5% of the shares who plans to transfer all or most of his or her shares (more than 50% of his or her shares) and whose transfer may result in a change of control of the company shall give the board of directors 30 days’ prior written notice.”

The board of directors has the right to require the transferee to provide qualification certificates and an explanation of the acquisition intention, and has the right to recommend convening an extraordinary general meeting of shareholders to consider the relevant matters.

At the same time, under the same conditions, the board of directors may recommend that other existing shareholders have a right of first refusal.

The day before, HSBC's public statement left some directors who had not received the anonymous letter somewhat confused.

Unaware of what happened, HSBC will proactively issue a public statement in the newspaper indicating that it will follow market rules and shareholder interests, and prudently sell its Hutchison Whampoa shares.

It was only then that the directors understood.

While Wynn's clause sounds noble, claiming to be for "company stability" and "protecting the interests of all shareholders," it is actually aimed at HSBC.

Once approved, HSBC's attempt to quietly sell its Hutchison Whampoa shares will be directly thwarted by the board of directors.

Shi Yadi and Newbijian immediately understood the meaning.

They exchanged a glance.

“I think this proposal is very necessary,” Shi Yadi said slowly. “Hutchison Whampoa is a publicly listed company, not anyone’s private property.”

Significant changes in shareholding by major shareholders should be communicated to the board of directors to avoid market panic caused by a lack of transparency, which could harm the interests of all shareholders.

Niu Bijian nodded in agreement: "I second that."

Prior information disclosure and the right of first refusal are common practices to protect the rights and interests of existing shareholders.

I agree to add this clause to the rules of procedure.

Once the two of them expressed their opinions, the other directors naturally had no objections.

The motion was passed swiftly. Chen Bingwen remained silent throughout, simply casting his vote in favor.

He knew perfectly well that Wylie was using him, Swire, and Jardine Matheson to increase his own leverage, but he was happy to see it happen.

Once this rule is established, the transaction between HSBC and Li Ka-shing will become much more difficult.

After the board meeting concluded, the directors left.

Shi Yadi and Niu Bijian walked out of the conference room side by side and exchanged a few words in hushed tones.

"Weili made this move too hastily," Shi Yadi said.

Newbijian snorted: "He was frightened by that letter and was in a hurry to find help."

However, this clause is not bad for us.

"What do you think of that young man?" Shi Yadi asked.

"He's got some skills, but he's got quite an appetite. Let's see what he does next."

HSBC, I'm afraid, won't concede so easily.

“Shen Bi must be having a real headache right now.” The two said as they walked toward the elevator, without exchanging any pleasantries with Chen Bingwen.

Chen Bingwen was then invited to the general manager's office by Wei Li.

"Mr. Chen, please have a seat." Wei Li personally poured him a glass of water. "Thank you for your support at the meeting just now."

"Chairman Wei Li, you're too kind. The terms themselves are beneficial to maintaining the company's stability, so I naturally support them." Chen Bingwen took the water glass.

Wei Li did not immediately respond to Chen Bingwen's words.

Instead, he walked to the filing cabinet, took out a thick folder, and placed it on the coffee table in front of Chen Bingwen.

"This is a briefing of Hutchison Whampoa’s business in the most recent quarter, mainly in the real estate and port sectors."

Wei Li acted as if he were conducting a normal handover, saying, "Mr. Chen is now the executive director. You have the right to review these documents so you can familiarize yourself with the situation as soon as possible."

Chen Bingwen took the folder but did not open it immediately.

He knew that looking at the documents was a pretense; his real intention was to use this opportunity to deepen their bond.

Wei Li sat down opposite him and casually said, "Hutchison Whampoa's assets are actually quite substantial."

The company expanded too rapidly in the past few years, resulting in high debt and management difficulties.

After several years of restructuring, the cash flow has become much more stable.

Especially the container terminal in Hung Hom and several real estate projects on Hong Kong Island—these are all golden goose geese.

At this point, Wei Li's voice became somewhat solemn: "Therefore, stability trumps everything."

Any equity changes that could cause significant management turmoil or disrupt established development strategies are not good for the company.

This is not in the best interests of all shareholders.

Chen Bingwen understood that Wei Li was stating his position.

He opposed HSBC's private transfer of shares to Li Ka-shing, as that would likely mean the removal of him as chairman and the current management team.

He was willing to cooperate with Chen Bingwen because Chen Bingwen was currently acting as a "financial investor" and needed him, as the chairman who was familiar with the situation, to stabilize the situation.

Chen Bingwen smiled and nodded, pretending not to know the inside story, and said, "Sugarheart Capital is a long-term investor, and it values ​​Hutchison Whampoa's core business."

A stable management team and a clear development strategy are crucial for shareholders like us.

He gave the other party the promise they wanted.

A visible relaxation appeared on Wei Li's face.

"That's good. Going forward, there are some things the board of directors might need Mr. Chen's support for."

"It's just following the rules," Chen Bingwen replied. "If you need me to do anything, Chairman Wei Li can have his secretary contact me at any time."

The two chatted for a few more minutes about the details of Hutchison Whampoa's business. The atmosphere seemed harmonious, but in reality, they both knew that this was just a temporary alliance based on their current common interests.

However, Chen Bingwen discovered something from Wei Li's words.

Although W.J. was put in power by HSBC, he was by no means a puppet.

He possesses a strong sense of self-respect and a desire for control as a professional manager, and is unwilling to become a victim of power transactions.

Currently, the two share the same goal, and the foundation for their cooperation is very solid.

Back at the Weiye Building, Vincent Fang and Gu Yongxian were already waiting in the office.

Chen Bingwen briefly explained the situation of the board of directors.

"The right of first refusal clause proposed by Wiley is very powerful."

Upon hearing Wei Li's response, Gu Yongxian showed his appreciation, saying, "This is tantamount to planting a thorn between HSBC and Li Ka-shing."

Even if they eventually manage to complete the transaction, the costs and risks will increase significantly.

"Does it stand up legally?" Chen Bingwen asked.

After all, among those present, only Gu Yongxian is a professional when it comes to the British legal system.

"Similar clauses have precedents in Anglo-American corporate law cases, mainly to protect the interests of other shareholders."

If the articles of association contain a catch-all clause for "protecting the overall interests of the company" and it has been approved through legal procedures by the board of directors, it will be very difficult to challenge.

HSBC can at best delay, but it's difficult to completely overthrow them.

Gu Yongxian analyzed.

(End of this chapter)