My absurd experiences in North America over the years

After finishing his conversation with Li Fu, Jackson immediately instructed his assistant, "Make an appointment with MGM CEO Cooper as soon as possible."

He wants to hold talks with MGM's management as soon as possible.

To show his respect for Li Fu, he will personally lead the team to spearhead this debt acquisition and do his utmost to make it happen.

The reason for his hands-on approach is quite simple: Li Fu asked him to join him in acquiring a project, but considering his own performance, he dared not take the risk. This was tantamount to refusing an invitation from a major client and offending the other party.

And this major client is not just any major client, but a super major client.

Putting aside other things, the foreign exchange transactions Li Fu made through the United Fund involved a massive amount of capital with a leverage of 400 times. JPMorgan Chase must have profited at least hundreds of millions from the price difference (foreign exchange transactions are generally conducted through contracts for difference on platforms).

Forrest Capital also received nearly ten million in rebates.

If we also consider that Forrest Capital and Allied Funds conduct their North American business through JPMorgan Chase, such clients are simply rare finds.

If he doesn't maintain it well, Li Fu can directly find Bank of America or Citibank to operate the joint fund and capital investment, which would really be a loss. Not to mention taking over the private sector, he might even be demoted.

Li Fu himself may not have taken his rejection to heart, but he had to demonstrate his value.

As Jackson walked out of the conference room, several of his team members were organizing documents. He was a little worried and gave them a few instructions: "Make sure to compile all the financial information from MGM, as well as some reliable inside information, and send it to me before you leave work."

He was prepared to leave immediately once the agreed time was set.

The next morning, Cooper replied that Jackson had taken a six-person elite team from JPMorgan Chase's private banking division and flew directly to Los Angeles.

MGM's headquarters is located in a not-too-tall office building in Century City. The entire floor is quieter than the surrounding area. Occasionally, employees pass by in the corridor, but they don't seem to be in good spirits.

This is quite normal; even the most glorious companies in the past will be filled with anxiety when facing bankruptcy.

This quietness is not due to good company order, but rather the lifelessness brought about by heavy debt or the ever-present threat of unemployment.

CEO Stephen Cooper sat at one end of the conference table, wearing a dark gray suit with no tie at the collar of his shirt. He looked much worse than in the photos.

He was seated next to a finance director and an external legal advisor; there was no one else.

Jackson knows Cooper, a restructuring expert who has helped Krispy Kreme and Enron with their bankruptcy proceedings and has a good reputation in the industry. He was recently brought in by MGM's board of directors to take charge.

However, it is clear that he overestimated MGM's current value.

Without exchanging pleasantries, Jackson sat down and placed the outline of the plan directly on the table. "Mr. Cooper, I have a private investor here who is interested in participating in MGM's debt restructuring by acquiring debt. Here is the specific plan."

Cooper has been under a lot of pressure since taking office. Several companies in the industry are indeed interested in acquiring MGM, but their offers are not ideal. He carefully flipped through a couple of pages, frowned slightly, and said, "60% of the debt, only $5 million?"

"Yes," Jackson nodded calmly.

JPMorgan Chase has a highly professional business team that has already conducted research. MGM's total debt is close to $40 billion, and with the debt defaults, late fees are still soaring. $5 million is not a low price.

"Since you have done your research, you should know that we have been in contact with several potential acquirers. If your client is only offering 5 million, there is still a considerable gap between this amount and the corresponding risk control requirements. Our internal assessment believes that the value of this transaction should be around 7 million to be closer to a reasonable price range."

Cooper was critical of Jackson’s excessive composure, which he saw as underestimating MGM’s value.

Jackson leaned back in his chair, not responding immediately. He glanced at his team's financial analyst, who nodded slightly, indicating that their investigation had no problems.

$5 million is a very reasonable range.

Jackson turned his gaze to Cooper and said seriously, "Mr. Cooper, I believe you are more aware of MGM's current debt situation than we are. The over-the-counter price of your company's bonds is less than 30% of face value. If we calculate it at 30%, your $37 billion debt is only worth a little over $1 billion in the secondary market. $700 million corresponds to your offer to us at close to 70% of face value."

This offer is unlikely to be accepted by investors for a company that has been unable to cover its operating costs for several years.

The meeting room fell silent immediately.

The MGM finance director wanted to say something, but ultimately remained silent because it was an undeniable fact.

Warner Bros. was willing to spend $15 billion because it would eliminate a competitor, and they had the resources and ability to revitalize MGM's intellectual property.

But for investors, the numbers don't add up.

Jackson continued, "We chose to enter through debt because we believe that MGM's brand and assets do have long-term value, but if we take over this debt at too high a price, we will have to take on nearly the same risk exposure as the existing shareholders, which would be a thankless task."

Cooper tried to appear calm and collected. "That makes sense, but you should know that MGM has other ways to raise funds."

Sometimes the value of an item depends not only on its intrinsic value but also on its market price.

Jackson nodded and smiled, "Of course I know. Warner Bros. offered $15 billion to acquire you, but you insisted on $20 billion. This negotiation seems impossible."

According to their team's research, MGM's top management generally believe they still have a chance to turn a profit, and selling the company at a low market value would be too foolish.

The difference between $15 billion and MGM's peak is too obvious, and they are not willing to accept it. At least $20 billion would be a psychological consolation.

However, there were no buyers for $2 billion, because it would have cost nearly $6 billion to acquire MGM. The financial crisis was not over yet, and even giants like Warner Bros. did not dare to take this risk.

"I feel it's necessary to remind you that with your current cash flow, if you can't find new sources of funding in the short term, you'll probably have to seek bankruptcy protection," Jackson said, hitting the nail on the head. "And once you go down the path of bankruptcy reorganization, creditors have the right to take away almost all the shares of the new company, and the original shareholders and management will be completely ousted."

This is the cruelty of the business battlefield. When it comes to bankruptcy reorganization, let alone 15 billion, you may not get anything at all.

Aren't the original shareholders and management of Forum Newspaper Group just like that?

Of course, given MGM's current situation, creditors will ultimately not fare well either, because MGM has no other high-quality assets to sell besides its film library. They would be lucky to get a return of more than 20% of the face value.

Cooper remained expressionless, a cold smile even playing on his lips. "You know we're facing a severe cash crunch, so even if $5 million came in, do you think that would be enough to get us out of this mess?"

He had a reason for wanting $7 million: the more money that came in, the better it would help MGM get out of its predicament.

"For an ordinary person, perhaps not," Jackson leaned forward slightly, "but this client of mine successfully revitalized the Tribune Group, a behemoth. I think I don't need to say more about his name, do I?"