Rebirth in Hong Kong: From Dessert Shop to Industrial Empire.

Chapter 161 Syndicated Loan (5K words, please vote with monthly tickets, recommendations, and subscriptions!)

With Chen Bingwen back in charge, Fang Wenshan immediately felt more confident and the next day went to Huoduoli with the strategy he had discussed with Chen Bingwen.

Zheng Jinhua was a little disappointed to learn that his proposal to invest in Chenji had been rejected.

He was optimistic about Chenji's potential and hoped to deeply integrate with this rapidly rising new company by investing in it.

His previous impression of Chenji Foods, a newly established Chinese-owned company, was that GG did a good job and had high-quality products.

Whether it's bottled sugar water or energy drinks, they are almost always ordered during the company's afternoon tea time.

Functional drinks, in particular, have become an essential tool for employees working overtime due to their amazing energizing and refreshing effects.

However, after seeing the summary of Chenji's financial statements that Fang Wenshan gave him a couple of days ago, this impression was completely overturned.

Zheng Jinhua clearly remembers the overwhelming shock he felt when he opened that seemingly ordinary financial statement.

The report shows that Chan Kee Foods achieved an astonishing growth from zero to monthly sales of over ten million Hong Kong dollars in just one year.

更令人难以置信的是其毛利率，瓶装糖水系列达到65%，而「脉动「功能饮料更是高达惊人的82%！（2.05/（0.45+2.05））

Even though the gross profit margin in the Japanese market has decreased due to channel reasons, it is still 77.9%.

What does this mean?

This means that Chenji can earn nearly 80% gross profit on every bottle of "Pulse" sold, which is almost unheard of in the highly competitive beverage industry.

The report also shows that Chenji's cash flow is extremely healthy, its accounts receivable cycle is short, and its inventory turnover rate is far higher than the industry average.

Especially in the Japanese market, the "Pulse" energy drink launched in collaboration with Suntory achieved nearly 400 million yen in terminal sales in its first month, and its growth momentum is rapid.

This has completely gone beyond the scope of "emerging companies" and is a high-quality company with strong profitability and explosive growth potential.

"Director Fang, to be honest, I feel somewhat regretful about your company's decision."

Zheng Jinhua stirred his coffee gently and said with some regret, "Huoduoli's investment will not only bring funds, but more importantly, it will provide Chenji with top-notch credit endorsement."

You're probably aware of the importance of this relationship in Hong Kong's business community.

Fang Wenshan smiled calmly and began to deliver his prepared remarks: "President Zheng, we are very clear about the strength and status of Huoduoli and HSBC."

In fact, it was precisely because of the importance Mr. Chen placed on the cooperation with Huoduoli that he specifically asked me to express our utmost sincerity.

He paused briefly, and seeing Zheng Jinhua listening intently, he continued, "Chen's is at a critical stage of rapid development, and we need to maintain flexibility in decision-making and focus in our strategy."

But this does not mean that we refuse to cooperate with top institutions.

Instead, we hope to cooperate in another form.

Zheng Jinhua raised an eyebrow: "Another form?"

"Yes." Vincent Fang took out a carefully prepared plan from his briefcase. "We sincerely invite Wintek to serve as the exclusive financial advisor for Chen Kee's two major projects: the acquisition of Watsons and the backdoor listing."

This not only demonstrates the professional value of Huoduoli, but also allows both parties to establish a close cooperative relationship.

Zheng Jinhua flipped through the plan, somewhat surprised.

He assumed that since Chenji had refused to invest, the backdoor listing and Watsons acquisition projects were definitely not going to be handed over to Huoduoli.

"Director Fang, your proposal is indeed very creative." Zheng Jinhua pondered for a moment. "But if I may be frank, we value the long-term returns from growing together with the company more than a one-time consulting fee."

Fang Wenshan had anticipated this reaction and calmly replied, "President Zheng, please believe me, this is just the beginning of our cooperation."

Chenji's future development requires professional financial services. If this cooperation goes well, we will give priority to cooperating with Huoduoli in areas such as mergers and acquisitions financing, bond issuance, and even overseas expansion.

Zheng Jinhua was silent for a moment, then finally smiled and said, "Alright, since your company is so sincere, we can discuss the consulting cooperation plan in detail."

However, the specific terms still need further negotiation between the two teams.

"Of course," Vincent Fang smiled. "We look forward to working with the top-performing team at Wharf Holdings."

With the professional capabilities of the company and the development potential of Chan Kee, this is sure to become a celebrated story in Hong Kong's business community.

As the two shook hands to say goodbye, Zheng Jinhua couldn't help but ask curiously, "Director Fang, if I may ask, why is Mr. Chen so obsessed with controlling stake?"

After all, many companies would love to have HSBC as a backer.

Fang Wenshan smiled slightly and said something that left a deep impression on Zheng Jinhua: "Chen Sheng often said, 'I'd rather go slower than not follow my own path.'"

Chenji aims to be a brand that doesn't depend on anyone, but rather a brand that can stand on its own two feet and even lead the industry in the future.

This statement sparked Zheng Jinhua's keen interest in Chen Bingwen, whom she had never met before.

He had a vague feeling that this young entrepreneur might actually be able to forge a different path in the Hong Kong business world.

When Fang Wenshan returned from Huoduoli, he went straight into Chen Bingwen's office.

He smiled and reported the entire process of his meeting with Zheng Jinhua to Chen Bingwen.

"Although Mr. Chen and Mr. Zheng Jinhua expressed their regret at not being able to invest, they ultimately accepted our proposed financial advisory cooperation plan."

He stated that he would arrange for a team to connect with us as soon as possible to discuss the details of the advisory contracts for the two projects: the acquisition of Watsons and the backdoor listing.

After listening, Chen Bingwen nodded calmly; this outcome was entirely within his expectations.

"That's normal."

Huoduoli is a top-tier financial advisory firm and will not turn down high-quality business and substantial advisory fees simply because it cannot acquire equity.

They understood Chen's potential, and getting involved would be profitable for them as well.

As he spoke, he pushed the financial statement he had just carefully reviewed onto the table toward Vincent Fang.

"Director Fang, you're back just in time."

The finance department has submitted the first quarter's financial statements, which I'm sure you've already seen. Next, we'll discuss the funding for the "acquisition of Watsons" and "backdoor listing" projects, and how to specifically raise the funds.

As the company's CFO, Vincent Fang knew every single figure on the financial statements by heart.

"Mr. Chen, this report is indeed encouraging."

Fang Wenshan turned to the first page, his finger landing on several key data points.

"Energy drinks alone contribute about HK$9 million in gross profit from the Japanese market each month. Add to that the HK$5 million from the Southeast Asian and Hong Kong Island markets, and that's HK$14 million."

Moreover, Mr. Chen, look at this trend," he pointed to the sales curve, "as market awareness increases, this number is still steadily rising."

Chen Bingwen nodded, smiled, and said nothing.

However, he secretly thought to himself, "This is nothing. If Chenji were to follow the example of Austrian Red Bull in my previous life and shift to a brand operation model with higher premiums and lighter assets, only controlling the brand, formula, and marketing, and outsourcing a large amount of production, there would be huge room for further improvement in gross profit margin."

"Let's look at bottled sugar water," Fang Wenshan turned a page, "starting from a monthly gross profit of only tens of thousands of Hong Kong dollars in 78, it has now grown steadily to contribute about four million Hong Kong dollars in gross profit per month across all markets combined."

After combining all income and cost expenditures, the two concluded that by April 79, Chan Kee Foods' monthly net profit had steadily reached HK$4 million.

"This means," Fang Wenshan took a deep breath and said excitedly, "that Mr. Chen, based solely on our existing business, our annualized net profit will exceed HK$140 million!"

This level of profitability has surpassed that of many long-established companies listed in Hong Kong Island.

Moreover, our growth momentum shows no signs of weakening.

Yes, ideals are lofty, but reality is harsh!

The financial statements clearly show that as of April 1979, Chen's accounts still had more than 24 million yuan in usable funds.

HK$2400 million in cash is available!

"Wenshan, this amount of cash is undoubtedly a huge sum, enough to satisfy many businessmen." Chen Bingwen was not excited by the amount of money at all, but calmly said, "But for the chessboard we are about to set up, this amount of funds still seems insufficient."

Fang Wenshan immediately understood what Chen Bingwen meant. They had already repeatedly planned ahead. Successfully completing the in-depth layout of overseas markets, acquiring Watsons, going public through a backdoor listing, as well as the planned research and development of new products such as paper cup milk tea, and dealing with the inevitable competition from international giants, none of these were small tasks.

In particular, the acquisition of Watsons is estimated to require HK$1 million to HK$1.5 million, and the related operations and funding preparations for the backdoor listing will also require HK$0.3 million to HK$0.5 million.

Based on this calculation, at least HK$1.5 million to HK$2 million in cash needs to be prepared.

Chen Bingwen leaned back in his chair and looked at Fang Wenshan, saying, "Relying on existing profits for rolling development is certainly safe, but it's too slow."

Opportunities in the capital market are fleeting; speed is often the lifeline that determines success or failure.

We must find a faster way to obtain funding.

The conversation naturally turned to the choice of financing channels.

After a moment of contemplation, Fang Wenshan said, "Although HSBC has taken on the role of consultant, their underlying nature as part of the HSBC group and their deep-seated desire for control remain a thorn in our side."

Forging deep equity ties with them is too risky; it's like asking a tiger for its skin.

Chen Bingwen agreed, "That's right."

Even if they are just hired as consultants, we must be wary of them trying to infiltrate our influence through various means, which is a common tactic used by British-owned institutions.

What we need is funding and professional services, not a potential "emperor emeritus."

His gaze then fell on a corner of the desk, where his secretary, Ali, had meticulously prepared information on American banks, covering the basic information of top investment banks such as Citibank, Morgan Stanley, Goldman Sachs, and Merrill Lynch in Hong Kong Island, as well as information on their Asia-Pacific regional heads.

Chen Bingwen picked up the document and analyzed: "British capital has deep roots in Hong Kong Island, but precisely because of its deep roots, it has many rules and tends to think like a 'master' rather than an equal 'partner'."

American capital, however, is different. They prioritize clear financial returns and long-term strategic planning, and their obsession with intervening in daily operations and vying for control is far less intense than that of the HSBC group.

Fang Wenshan continued, "Moreover, Mr. Chen, there is another crucial point."

As the signals of reform and opening up in mainland China become increasingly clear, these American giants are all eager to open the door to this vast market.

Supporting a Chinese-owned enterprise like our Chen Ji, which has already established substantial connections with the mainland through its factory in Dongguan and has unlimited potential, is strategically significant and may bring huge indirect returns that could even exceed the interest income from a loan itself.

This is something they value very much.

Chen Bingwen gave Fang Wenshan an appreciative look; his capable assistant had already caught up with his train of thought.

"Well said."

Therefore, our financing strategy should focus on American banks.

He tapped his finger on the profiles of Citibank, Morgan Stanley, and Goldman Sachs. "I'm thinking that instead of negotiating with just one bank, which is time-consuming and laborious, we should take a bigger step."

Chen Bingwen had thought about this issue before Fang Wenshan came.

Negotiating with a single American bank might be relatively easier, but it would also carry the greatest risk.

The oil price surge brought about by the second oil crisis has already begun to trigger a chain reaction.

As an open economy, Hong Kong Island will inevitably be affected.

The pressure of rising raw material costs, increased transportation expenses, and overall price increases is building.

"Director Fang, have you thought about this?" Chen Bingwen said in a deep voice, "If we put all our funding needs on an American bank, what's the difference between that and relying on Huoduoli?"

If the economy fluctuates in the future, or if the bank adjusts its own strategies, we will also be in a passive position.

Vincent Fang immediately understood Chen Bingwen's concerns: "You mean, even if we choose American capital, we should avoid 'putting all our eggs in one basket'?"

"That's right," Chen Bingwen replied affirmatively. "The surge in oil prices will push up global inflation, and the Hong Kong government is likely to tighten monetary policy in the near future in order to stabilize the economy."

At that point, any slight disturbance could lead to banks withdrawing loans.

"Withdraw the loan?" Fang Wenshan's expression turned serious.

This term is undoubtedly fatal for companies that are highly dependent on cash flow.

"Yes." Chen Bingwen nodded heavily. "If we rely on only one or two banks now, the risk will be too concentrated."

If the economy slows down, or banks themselves face liquidity constraints, they are likely to demand early repayment or significantly tighten the conditions for loan renewal.

If, by chance, our funds are used for other purposes, it could very well cause a break in the financial chain.

Speaking of banks withdrawing loans, Chen Bingwen has firsthand experience. Before the mask crisis, at least half of the companies he invested in went bankrupt because of banks withdrawing loans.

This time, it's his turn, and he absolutely cannot repeat the same mistake.

"Mr. Chen," Fang Wenshan replied with a solemn expression, "that's exactly what I'm worried about."

In an inflationary environment, the Hong Kong government is likely to adopt austerity measures, and banks will be more cautious in lending.

If we rely solely on a single bank for funding, our cash flow will face enormous pressure if credit tightens; they are likely to withdraw loans or significantly raise interest rates.

Chen Bingwen nodded approvingly: "You've hit the nail on the head."

Therefore, we not only need to find American banks, but also need to form a syndicate with multiple banks at the same time.

This approach both diversifies risk and ensures the stability of the funding supply.

Fang Wenshan said, "Mr. Chen, this is indeed the best solution at present."

This approach not only disperses the risks and funding pressures that individual banks would otherwise bear, accelerating approval and fundraising, but also integrates the resources and networks of these American giants, forming a powerful synergy.

Whether it's strengthening our negotiating leverage during the acquisition of Watsons or seeking support through a backdoor listing, this combined force allows us to achieve twice the results with half the effort!

"Yes!" Chen Bingwen affirmed. "The syndicated loan model is particularly suitable for situations like ours where we need to make large-scale strategic acquisitions."

Joint due diligence and funding from multiple banks not only improves efficiency, but also serves as a strong endorsement of our company's credibility, setting a positive example for the industry.

Having made the decision, the two discussed the specific details, and then Chen Bingwen pressed the intercom: "Ali, come in for a moment."

Secretary Ali arrived at the office soon after.

"Prepare three formal business cooperation invitations immediately," Chen Bingwen instructed, "and send them to the Asia-Pacific heads of Citibank, Morgan Stanley, and Goldman Sachs in Hong Kong Island respectively."

The content is as follows: Chan Kee Foods intends to raise a syndicated loan of up to HK$300 million to implement a major strategic acquisition and capital operation plan, and sincerely invites them to participate in the evaluation and cooperation.

"Understood, Mr. Chen." Ali quickly took notes. "Is it an invitation in the form of a syndicated loan?"

"That's right. Tell them this is a joint operation, and we welcome capable and visionary partners to participate."

Chen Bingwen added, "The tone should be formal and sincere, while also reflecting our confidence and strength."

"Okay, I'll take care of it right away."

After Ali left to carry out her orders, the office fell into a brief silence.

Chen Bingwen stood by the window, gazing at the distant harbor, lost in thought.

Fang Wenshan stood quietly to the side, both of them digesting the important decision they had just made.

A loan of HK$300 million!

A loan of HK$300 million! This was an astronomical figure in Hong Kong in 1979, enough to make any business owner's heart race.

But Chen Bingwen's eyes only showed calmness and deep thought.

While following a set routine may offer stability, in the ever-changing business world, being conservative often means missing out on opportunities.

"Director Fang," Chen Bingwen suddenly spoke, breaking the silence, "Regarding the syndicated loan, we need to be prepared for both possibilities."

Although the three American banks are financially powerful, they are also shrewd businessmen and may not easily agree to our terms.

Fang Wenshan nodded in agreement: "Mr. Chen has considered things very carefully."

In particular, with rising oil prices triggering inflation expectations, banks will be more cautious in lending.

We need to prepare a proposal that they can't refuse.

"That's exactly right." Chen Bingwen turned to Fang Wenshan and said, "You need to immediately start doing three things:

First, prepare a detailed anti-inflation analysis report, highlighting the defensive characteristics of Chenji's essential consumer goods;

Second, we will assess the specific impact of rising oil prices on our costs and propose corresponding solutions.

Third, prepare a syndicated loan proposal that highlights our strong sales performance in the Japanese and Southeast Asian markets, as well as our anticipated entry into the North American market.

"Understood!" Fang Wenshan immediately understood. "I will organize the finance team to work overtime to finish it right away."

Especially in the Japanese and North American markets.

(End of this chapter)