Reborn in 08, a heretical cultivator starting a business

Chapter 172 Acquiring Little Duck, Aggressive Reform!
[Sweet's financial ruin led to the mortgaging and auctioning of its factory land, equipment, and workshops. Employees formed a self-help committee and raised funds to keep the production line running.]

[Sweet is on the verge of bankruptcy and has been seized by multiple parties. It completely withdrew two years ago, and the Little Duck restructuring has already failed, with the entire company returning to the Jeju State-owned Assets Supervision and Administration Commission. The Little Duck brand has been completely reclaimed.]

When the news came out, the whole country was in an uproar.

The online public opinion exploded:
"No wonder there are fewer Little Duck washing machines; they were really screwed over by Sweet."

"That's right. Before the restructuring, Little Duck's debt was only about 300 million, but after Sweet's restructuring, its debt reached 1 billion."

"It's terrible. Sweet didn't pay any money or take on any debts. Instead, he emptied Little Duck's assets. Even the land, equipment, and factory buildings of Little Duck's main factory were mortgaged to three banks."

"That's normal. Little Swan and Changling were also emptied of many assets by Sweet."

"Yes, the Xishi State-owned Assets Supervision and Administration Commission sold Little Swan for 3.5 million yuan and bought it back for 4.8 million yuan. In addition to the assets that were taken out and the new liabilities, the losses are more than one billion yuan."

"By the way, what's Sweet's background? How come he's been able to scam so many well-known companies?"

"Sweet, hahaha, he was once a super tycoon, a legend in capital operations."

"Founded in Nandu in 92, it engaged in communication technology research and development. In 95, it entered the fiber optic field and has been developing steadily in recent years."

"In 1998, we acquired the nearly bankrupt Shanghai Technology, went public through a backdoor listing, and quickly grew to over 500 million yuan in revenue."

"In 00, we acquired a large number of shares in Little Swan, which was on the verge of bankruptcy, and entered the home appliance industry. Revenue exceeded 30 billion yuan."

"Acquired a controlling stake in Changling in 02."

"In 2003, revenue exceeded 10 billion yuan, covering all aspects of communications, home appliances and capital operations, and later even entered the real estate industry."

"But unfortunately, with all the capital operations and financial fraud, trouble was bound to come sooner or later. In 05, a case was filed against them, and in 06, the old chairman was taken into custody. That was the end for Sweet."

"My God, all those 10 billion+ in revenue and big-money acquisitions were just financial fraud and capital manipulation!"

"Of course, otherwise how could Sweet get up?"

“If this operation continues, there will be no problem, and no one will ignite it. But once a node malfunctions and collapses, the entire chain breaks down.”

"It's a pity for Little Duck. No one expected that Little Duck, which was among the top three in the country just a few years ago, would have fallen to this state."

"Support Jeju State-owned Assets Supervision and Administration Commission. The little swan has already made it ashore, and I hope the little duck can also make it ashore."

……

Seeing these opinions, Wang Junshan felt much more at ease.

The revival of Little Duck meets public expectations.

After all, at its peak, Little Duck washing machines were number one in the country, especially the high-end drum washing machines, which were unrivaled in the market.

After 2000, Little Swan and Little Duck expanded wildly, but their funding dried up and their development was hindered.

Haier, on the other hand, has continuously invested in research and development, which has enabled it to accumulate strength and achieve a breakthrough by taking a shortcut to overtake its competitors.

The Jeju State-owned Assets Supervision and Administration Commission acted swiftly, issuing a public statement to completely sever ties with Sweet.

On the other hand, a debt restructuring team was immediately established, and a series of negotiations were held with a number of Little Duck Electric's creditors, such as ICBC, ABC, CCB, and suppliers.

Future Technology was not involved in the entire process.

Wang Junshan only provided 600 million yuan in advance funding and will not directly participate in the debt restructuring.

There's no other reason than that this is a troublesome matter.

Once you get involved, there will be endless troubles to come.

When the creditors saw that a sucker had taken over, they naturally demanded exorbitant prices.

But if they don't participate, none of the creditors can do anything about it.

Everyone knows that Little Duck is 1 billion yuan in debt and can't pay it back, not even in this lifetime.

They can't repay either the bank or the supplier.

Little Duck Electric's main factory has been mortgaged by three banks. What else can they sell?

It’s gone, everything is gone!

These debts are, in short, bad debts.

The fact that the Jeju State-owned Assets Supervision and Administration Commission is now willing to cover the losses is the best possible outcome.

If even the State-owned Assets Supervision and Administration Commission doesn't take care of it, then it's completely useless.

After nearly a week of negotiations, no agreement has been reached.

On the seventh day, Mayor Zhao personally attended:
"Everyone knows the current situation of Little Duck Appliances. It's definitely not going to pay back."

"Even if we wait three or five years, we still won't be able to pay it back."

The crowd's faces were grim, but they were helpless.

This is the truth.

It's already been overdue for more than three years. If it's overdue for another three years, then I really won't be able to get it back.

"However, the State-owned Assets Supervision and Administration Commission cannot stand by and watch you lose everything."

Mayor Zhao then changed the subject: "So, despite the enormous pressure, we raised some funds to carry out this debt restructuring."

"We talked for a week, but we couldn't reach an agreement."

"This is the first and only time I've come here. If it can be resolved, that would be great."

"What if it can't be resolved?"

"Then you'll have to go ask Little Duck Appliances for it yourselves."

Upon hearing this, everyone's expression changed.

Mayor Zhao's words were very direct.

If this problem can be resolved, then the State-owned Assets Supervision and Administration Commission will step in.

If this problem can't be solved, the State-owned Assets Supervision and Administration Commission won't get involved anymore. You'll have to go ask Xiaoya for help yourselves.

But now the little duck has nothing left, nothing to ask for.

The State-owned Assets Supervision and Administration Commission (SASAC) is the only and last chance.

The debt discount is therefore only natural.

After all, it's good enough that someone is covering the losses; you're still expecting to get all the principal and interest back?

What a joke!
"Start with ICBC, give us a price."

Sun Zhen, the head of the provincial branch of ICBC, took a deep breath: "Xiaoya Electric owes us 2.8 million yuan in principal, 1.9 million yuan in interest and penalties, totaling 4.7 million yuan. Let's round it down to 4 million yuan."

"That's too much. We'll give one company 400 million, but what about the others? Are they going to starve? The total budget is only 500 million!"

"This..." Everyone frowned, but they knew in their hearts that a 5 million guarantee was a reasonable price.

The State-owned Assets Supervision and Administration Commission's money doesn't come from thin air; it's most likely from land swaps.

If the 300-acre industrial park is converted into commercial and residential properties, it can only be sold for around 600 million yuan. After deducting the land transfer fee and other taxes, it will only be a little over 500 million yuan.

In fact, all parties have figured out the score.

"Then 3.5 million, that's the lowest I can go," Sun Zhen said helplessly. This was the bottom line the head office had given them before he came.

Mayor Zhao shook his head, his attitude firm: "You should discuss it with the head office again. We'll talk to the next one first."

Sun Zhen's lips twitched, but he was helpless.

The State-owned Assets Supervision and Administration Commission (SASAC) is just providing a safety net; giving 300 million yuan is already quite generous, as it's not money owed by SASAC.

But the head office wouldn't agree, and he, as the head of the provincial branch, was caught in the middle and had no choice.

The head of the Agricultural Bank of China said, "In 2006, Xiaoya mortgaged its factory and equipment to get a loan of 1.15 million yuan, with interest and penalties totaling 0.43 million yuan. Just return the principal of 1.15 million yuan to us."

"No problem." Mayor Zhao nodded and ticked it off in his notebook: "Next."

The head of China Construction Bank also spoke up: "Last year, the technological upgrading loan was 0.82 million yuan, the interest was 0.28 million yuan, and we only need to repay the principal of 0.82 million yuan."

"Okay." Mayor Zhao ticked the box again and looked at the ICBC CEO.

The meaning is clear: it's only 5 million. Priority is given to repaying the bank, and then there are suppliers. If you don't take initiative, you'll end up with nothing.

Sun Zhen's expression changed slightly, and he quickly stood up: "Mayor Zhao, wait a moment, I'll make a call right away."

"Go!"

Sun Zhen walked out the door and dialed Old Dong's number directly at the head office:

“Little Duck has a debt of 1 billion, and the State-owned Assets Supervision and Administration Commission is only willing to provide 500 million to cover the debt. According to our calculations, the Agricultural Bank and the China Construction Bank will take 200 million of the principal, and it will take nearly 200 million to resettle the employees. There are still so many suppliers who owe money. If we ask for more, we won’t get a single penny!” Old Dong turned on the speakerphone, looked at the people around him, exchanged glances, and nodded: “Then let’s just take the principal. It’s better than not getting a single penny back.”

"Row!"

Sun Zhen returned to the conference room: "Mayor Zhao, our ICBC only needs 2.8 million yuan in principal."

“Very good. The total expenditure is now 4.77 million.”

Mayor Zhao remained silent, and the three banks squandered the budget.

There are still 0.68 billion yuan in unpaid wages, 0.47 billion yuan in social security contributions, and 0.65 billion yuan needed for employee buyouts and resettlement.

That's another 1.8 million!
The budget has already exceeded 6 million!

There are also outstanding payments to suppliers that haven't been settled.

How to deal with this?
The restructuring has already begun, so things have to be dealt with eventually.

Mayor Zhao looked at the suppliers: "The current budget is already over budget. At most, we can only pay you according to the cost."

The three suppliers exchanged glances and could only nod helplessly.

This has become all too common since the financial crisis began.

Bankruptcies and debt defaults are commonplace.

However, most other companies were unable to repay the debts, and no one was there to bail them out.

Many state-owned enterprises have no one to bail them out.

The fact that the Jeju State-owned Assets Supervision and Administration Commission is willing to cover the losses is already extremely good.

It's normal to only compensate at cost price, since most companies don't give a penny at all.

After calculating, the principal of the payment was 1.6 million, and 0.8 million was paid as cost to settle the matter.

Mayor Zhao sighed: "The rest are the tax bureau, whether it's the municipal bureau, the district bureau, or the environmental protection bureau. Let's waive them all. You all know the situation."

All three parties nodded, having no choice but to accept it.

Tax exemption is inevitable for this kind of thing.

Even if Little Duck resumes operations, it will be tax-free for several years.

There's no other way; bankrupt companies need support.

Let alone tax exemption, it's already quite remarkable that they didn't have to ask several parties to contribute money to help balance the accounts.

After some negotiations, the three banks finally settled the debt of 7.4 million yuan in principal and interest, with 4.7 million yuan in principal.

The dealer's debt of 2 million plus default penalties was resolved for 1 million.

The overdue taxes were waived and were never included in the calculation.

"Mayor Zhao, what do you think about the logistics costs for our transportation group..."

"How many?"

"0.21."

"Well, you've already made a lot of money, so let's waive that for now. We'll give you a share of any future projects to make up for it. State-owned enterprises need to be responsible!"

"Okay... fine!" The other party had no choice but to agree.

"The bank has 4.7 million, employees have 1.8 million, and suppliers have 0.8 million, which already amounts to 7.3 million."

Mayor Zhao quickly calculated.

Wang Junshan advanced 6 million yuan, but there is still a shortfall of 1.3 million yuan.

We have no choice but to squeeze the budget.

The following day, the Jeju State Assets Supervision and Administration Commission and representatives of all debtors formally signed the debt restructuring agreement.

After the signing, Mayor Zhao approached Wang Junshan:
"Chairman Wang, it's all settled. Look, all the debts have been agreed upon."

"A total of 7.3 million. You borrow 6 million from the State-owned Assets Supervision and Administration Commission to cover the shortfall, and we'll add another 1.3 million to make it all even!"

"The core assets that were mortgaged and seized will all be recovered!"

"Okay!" Wang Junshan readily agreed; this was the best outcome.

Once the ducklings are successfully marketed, the potential profits can be substantial.

After some communication, the two parties signed several agreements.

The first agreement was a loan agreement for 6 million yuan.

Interest will be paid at the benchmark rate of 5.76%, and the debt will be repaid within two years.

The second deal involved Future Smart Home acquiring Little Duck's washing machine business and its main factory for zero yuan and zero assets. Little Duck Appliances became a sub-brand of Future Smart Home.

Within a year, Future Smart Home plans to invest 200 million yuan to upgrade its production lines, implement technological transformations, and fully resume production.

The third document is a comprehensive industrial support and integration agreement for Little Duck Electric Appliances.

Finally, we reached the negotiations for the international warehouse.

"Chairman Wang, the Jeju International Warehouse was originally planned for 500 mu, which is a bit too small. Especially after Xiaoya was integrated by you, it has a good chance of growing bigger, and storage resources will definitely be tight then. How about we allocate 800 mu to you? We'll give you the land for free and provide you with generous policies."

"Okay," Wang Junshan readily agreed.

There's no reason not to accept land that's given away for free.

Moreover, this location is excellent.

It's close to the railway, the highway, and the airport.

Simply perfect!
Now that the Little Duck Factory covers 300 acres, Wang Junshan will definitely add production lines and increase production capacity in the future.

Even the original warehouses had to be converted into workshops.

That means there won't be enough storage space.

The washing machines produced at that time were sent directly to the Jeju International Warehouse.

Then, by means of railways and highways, the products are distributed to Haier RRS warehouses all over the country, and RRS will then ship the goods from the nearest location and deliver them to the door.

On November 27, Wang Junshan visited the Little Duck Factory.

At this time, the Little Duck Factory had already undergone changes.

A new sign has appeared on the plaque at the entrance—Future Smart Home!
Even before acquiring Little Duck Group, Wang Junshan had Tang Jinghe register Future Smart Home.

Wang Junshan's thinking is very clear: a dual-brand strategy.

Mid-to-low end, Little Duck brand.

High-end partition washing machine, the future of smart home.

This allows for low-end competition without affecting the high-end positioning of Smart Home in the future.

Tang Jinghe even arranged for her finance and other teams to move into the Little Duck Factory in advance to carry out a series of rectifications.

Looking at the current state of the factory, Wang Junshan felt increasingly distressed.

These past few years have really dragged Little Duck down.

With a large number of production lines idle, the peak annual production capacity of over one million units has only reached 50 units this year.

A large portion of the factory area is vacant.

Even worse, there are still 20 units stuck in the warehouse that can't be sold!
Factory manager Li Ming said somewhat awkwardly, "I'm sorry, Chairman, this is the current situation for Little Duck. Our production lines are outdated and can only produce the lowest-end double-cylinder impellers and fully automatic impellers. We only have one roller production line left, and it hasn't been updated for many years."

Wang Junshan nodded, turned around, and returned to the conference room.
"I understand the overall situation of the ducklings. Now, we will carry out a comprehensive reform."

“The current Xiaoya is no longer the state-owned enterprise it used to be, so the days of eating from the same pot are over.”

"Those of you who are willing to stay will become employees of the private enterprise Future Smart Home, and will need to re-sign contracts and have your seniority recalculated. You will operate according to Future Smart Home's salary and promotion system."

"Those who don't want to stay can opt for a buyout based on their seniority, with the State-owned Assets Supervision and Administration Commission (SASAC) covering the costs. Alternatively, if you have connections, you can return to the parent company, Little Duck Group."

"The HR department is fully cooperating. Regarding your previous unpaid wages, Future Technology has already lent 6 million yuan to the State-owned Assets Supervision and Administration Commission (SASAC), and the SASAC is handling the matter comprehensively."

"But what I can guarantee is that those who stay will have their wages paid in full, their social security contributions paid in full, and they will not be laid off arbitrarily. Their benefits will be even better!"

"The little duck's future can also develop better."

(End of this chapter)