Rebirth in Hong Kong: From Dessert Shop to Industrial Empire

Chapter 200 Borrowing Money (Seeking monthly votes, recommendations, and subscriptions!)
The next morning at 10:00 AM, at the tea room of the Mandarin Oriental Hotel.

Li Jiacheng and Bao Yugang sat in almost the same spot again.

Sunlight streamed through the glass window, falling on the delicate teacup, almost overlapping with the scene from a year ago.

A year ago, right here, Li Ka-shing transferred his Wharf Holdings shares to Pao Yue-kong, and the two reached an unspoken verbal agreement: if Li Ka-shing were to take a liking to Hutchison Whampoa in the future, Pao Yue-kong would need to support him at the HSBC board meeting.

Times have changed, and Li Jiacheng's purpose in meeting with Bao Yugang this time is completely different.

"Mr. Bao, to be honest, I've run into some trouble this time, and my cash flow is a bit tight."

Li Jiacheng carefully chose his words, avoiding direct mention of Qingzhou Yingni, "I'd like to see if you can temporarily allocate 200 million yuan for short-term cash flow, with interest rates at the highest market rate."

Bao Yugang picked up his teacup, blew on it gently, and did not answer immediately.

He had naturally heard about the recent market competition between Cheung Kong Holdings and Sugar Heart Capital over Yingni in Qingzhou, and he also vaguely guessed the purpose of Li Jiacheng's loan at this moment.

Although Pao Yue-kong acknowledged Li Ka-shing's favor in the Wharf Holdings stock acquisition, Li Ka-shing did indeed relinquish the opportunity.

But Li Jiacheng earned every penny he was entitled to, and in order to repay this favor, Bao Yugang also spoke highly of Li Jiacheng in front of Shen Bi.

Otherwise, how could Shen Bi have been so focused on Li Jiacheng?

In a way, this favor has been repaid.

Now that Li Jiacheng has asked again, and for a huge short-term loan, he is in a difficult position.

After a moment of contemplation, Bao Yugang slowly spoke: "Mr. Li, it's not that I don't want to help you."

We both know that all my thoughts and funds are currently focused on the Wharf Holdings deal.

The plate is too big; I can't pull it out at all.

I may seem successful to outsiders, but in reality, I don't have much more readily available cash than you.

Acquiring Wharf Holdings was a do-or-die situation; we simply couldn't spare the resources to help you. It's truly beyond our ability to assist you.

This answer was within Li Jiacheng's expectations, but his heart still sank for a moment.

Zhuang Yueming's words from last night still echoed in his ears: "Brother Cheng, don't give up so easily."

We've been eyeing that piece of land in Yingni, Qingzhou for a long time; it has huge potential, and it would be a shame to give it up now.

Let's ask the shipping magnate first. He owes us a favor last year, so even if he can't lend us the whole amount, he can at least help us out a bit.

If all else fails, we can try contacting HSBC; there's always room for maneuver. We can't give up on Qingzhou Yingni so easily.

Bao Yugang put down his teacup, looked at Li Jiacheng's expression, and said, "Mr. Li, as you know, I've also been raising money recently."

Jardine Matheson is putting a tight grip on Wharf Holdings, and my cash reserves are also tight. My cash position is not ample.

It's not that I don't want to help you, it's just that I can't find the time. But..."

He paused for a moment, then continued, "Once the Wharf matter is settled, perhaps we will have the opportunity to cooperate."

"Your Cheung Kong is good at real estate, and my Global Holdings has land and ships. We might be able to do something together in the future."

These words sound like a comforting statement, or a vague promise, but they are too little, too late to help in an immediate crisis.

Knowing there was no turning back, Li Jiacheng forced a smile and said, "I understand. Mr. Bao also has his difficulties. I won't bother you any longer. I wish you success with the Kowloon Wharf project."

After leaving the Mandarin Oriental, Li Jiacheng sat in the car, remained silent for a moment, and said to the driver in the front seat, "Don't go back to the company, go straight to HSBC."

In the HSBC chairman's office, Sir Michael Sandberg listened to Li Ka-shing's request with almost no hesitation.

On the one hand, he has always been optimistic about Li Jiacheng's abilities and reputation.

On the other hand, the anonymous letter targeting HSBC's stake in Hutchison Whampoa and the ensuing controversy made him feel indebted to Li Ka-shing, since it was he who initially hinted at the intention to sell.

Supporting Li Jiacheng at this moment is justifiable both publicly and privately.

“Mr. Li, two hundred million for a short-term bridge loan, no problem.” Shen Bi readily agreed. “Let’s use the Qingzhou Yingni shares currently held by your Cheung Kong Holdings as collateral.”

I will have my staff process the paperwork as quickly as possible.

This collateral is so favorable that it's almost as if HSBC has taken on the main risk.

In addition, Sir Michael Sandberg told Li Ka-shing that he planned to transfer 10% of Hutchison Whampoa’s shares to Cheung Kong Holdings.

This approach avoids the preemptive right clause recently introduced by the Hutchison Whampoa board.

This 10% stake can also be used to test the strength of opposition from HSBC board members such as Swire and Jardine Matheson during board votes.

If the opposition isn't too strong, there will simply be a few more transactions, and the goal of selling Hutchison Whampoa to Li Ka-shing can eventually be achieved.

Hearing Shen Bi's arrangement, Li Jiacheng felt a great weight lifted from his heart and solemnly thanked him: "Thank you for your support, Sir. I will definitely not let you down!"

That afternoon, HK$200 million was transferred to Cheung Kong Holdings' account.

Without the slightest delay, Li Jiacheng immediately ordered the investment department: "Tomorrow, as soon as the market opens, go all out to buy up Qingzhou Yingni, drive up the stock price, and absorb all the sell orders on the market!"

The Hong Kong stock market opened the following day.

The stock price of Qingzhou Yingni surged like it had been injected with chicken blood, with a flood of buying orders causing the price to soar and the increase to quickly exceed 15%, while the trading volume also increased dramatically.

There's a lot of discussion in the market, with people confused about the fluctuating price of Yingni in Qingzhou.

Weiye Building, Investment Department.

Seeing the unusual activity on the stock market, Fang Wenshan immediately reported to Chen Bingwen: "Mr. Chen, Cheung Kong Holdings is buying up shares like crazy, and the stock price is rising rapidly, already up by almost 20%."

"Should we follow?" Chen Bingwen walked to the stock chart, looking calmly at the steeply rising white line.

He turned to Vincent Fang and asked, "How many shares do we currently hold?"

"Including those quietly acquired in the last few days, it has already reached 42.3%," Fang Wenshan quickly reported the figure. 42.3%.

Chen Bingwen quickly calculated in his mind.

After this round of aggressive buying, Li Jiacheng's shareholding ratio should be close to 30%, but to surpass him, he would have to buy all the remaining circulating shares on the market, which is almost impossible.

Continuing to buy shares one by one in the secondary market is time-consuming, labor-intensive, and will drive up costs indefinitely.

“There’s no need to follow along,” Chen Bingwen decided. “Continuing to fight like this will only help early retail investors and small shareholders to profit from the situation.”

It's not very meaningful.

He paused, looked at Fang Wenshan, and said, "It's time to end this. Issue an announcement, in the name of Sugar Heart Capital, to all shareholders of Qingzhou Yingni."

The purchase price will be 50% higher than the current market price, with a one-month deadline.

Fang Wenshan and Xie Jianming, the investment department manager, exchanged a glance and both saw the surprise in each other's eyes.

This move was a decisive blow.

The 50% premium is extremely attractive and enough to make the vast majority of small and medium-sized shareholders accept it without hesitation.

For Sugar Heart Capital, which holds a 42.3% stake, acquiring just 6.7% more would bring it to 49%.

This shareholding percentage was precisely below the 50% takeover threshold set by the Hong Kong Securities and Futures Commission at that time.

"Understood, Mr. Chen! I'll arrange the announcements and documents immediately to ensure compliance with the merger and acquisition code." Fang Wenshan was the first to react.

"I'll go prepare the funds to ensure the acquisition payment arrives on time," Fang Wenshan followed closely behind.

Chen Bingwen added, "We need Gu Yongxian's cooperation to ensure that there are no legal loopholes in the announcement."

That afternoon, Sugar Heart Capital officially released its acquisition announcement.

The news caused an uproar in the market.

Qingzhou Yingni's stock price instantly froze at a high level.

Many shareholders, especially retail shareholders, began calculating the premium gains and prepared to accept the acquisition.

When Li Ka-shing saw the report in his Cheung Kong Holdings office, his face instantly turned ashen.

He hadn't expected Chen Bingwen to be so decisive, directly unleashing the powerful weapon of a full acquisition, and at such a high premium.

The 50% premium acquisition means that if he continues to bid, the cost will be much higher than Chen Bingwen's, and he may not be able to get enough shares.

Given that Cheung Kong Holdings currently holds approximately 30% of Qingzhou Yingni's shares, to surpass Sugar Heart Capital's 42.3% stake and gain controlling interest, it would need to acquire at least another 13% of the shares on the market.

Moreover, competing for shares already locked up by Sugar Heart Capital's high-priced offer at a price far above the current market price is an almost impossible task, requiring astronomical sums of money.

Moreover, HSBC's upcoming transfer of its 10% stake in Hutchison Whampoa will also require a huge cash payment.

After much deliberation, Li Jiacheng finally took a deep breath and made a difficult decision.

He picked up the phone and connected to the investment department: "Stop buying Qingzhou Yingni."

He really gave up.

They will no longer compete with Sugarheart Capital for absolute control of Qingzhou Yingni.

He lost this battle.

Now, he must concentrate all his resources to ensure that he can successfully acquire Hutchison Whampoa's 10% stake, which is the more crucial battleground in the future.

Almost at the same time that the buy order for Cheung Kong Holdings stopped, the traders in the investment department of the Weiye Building, who had been closely monitoring the market, immediately noticed the change.

"Director Fang, the buying of Cheung Kong Holdings has stopped!" a trader reported, looking up. "The upward momentum of the share price has slowed down, and the trading volume is also shrinking."

Fang Wenshan strode to the price list, confirmed the situation, and then picked up the internal phone to report to Chen Bingwen: "Mr. Chen, there's been a change in the market. Cheung Kong Holdings' aggressive buying has stopped; it seems they've given up."

Chen Bingwen had already anticipated this outcome when he issued the acquisition announcement with a 50% premium.

Li Ka-shing is a shrewd businessman who knows how to calculate costs and risks.

Knowing that the task is futile and the cost would be enormous, cutting losses in time is his inevitable choice.

The struggle for Yingni in Qingzhou has now essentially come to an end.

"understood."

Chen Bingwen calmly stated, "Our acquisition announcement will proceed as scheduled and need not be withdrawn."

Our objective remains unchanged: continue acquiring shares until we achieve a 49% stake.

He doesn't need absolute control of 50%, as that would trigger a mandatory takeover bid, which would be too costly.

Under the current Hong Kong Company Law framework, the 49% stake is sufficient to ensure his absolute control over Qingzhou Yingni, enabling him to implement his development plan without hindrance, while also avoiding excessive expenditure of funds.

What he wanted was absolute control over the land, not just a nominal title.

“Understood,” Fang Wenshan replied on the other end of the phone. “We will continue to monitor the acquisition progress and ensure that the target shareholding is reached within a month.”

(End of this chapter)