Chapter 522 Losing money! Heartache!
On June 8, 2013, a piece of news was like a huge rock dropped into the water, causing a huge stir in the Chinese business world.
As authoritative organizations such as the Ministry of Commerce and the China Council for the Promotion of International Trade announced the list of delegations accompanying high-level officials on their visits to the United States, the entire Chinese business community was shocked.
On this list, known as the "Business Heaven Group", the heads of the eight major groups shine brightly:
China National Petroleum Corporation, China National Bank, Donghai Automobile Group, COFCO Group, China Electronics Information Industry Group, China Pharmaceutical Group, and the most eye-catching Tenda Technology Group.
These eight business tycoons will accompany the leaders in talks with senior US officials, business leaders, and bank presidents, a meeting of unprecedented standard.
In this star-studded list, Tenda Technology, as the only private enterprise, stands out like a single red plum blossom among a cluster of flowers.
At the same time, at Hengdian Film and Television City, the crew of "The Imperial Doctress".
In the lounge, the air conditioner sends out a cool breeze to dispel the summer heat.
Liu Shishi, dressed in a light blue costume, lay lazily on a bamboo rocking chair, browsing Weibo trending searches during the break in filming.
Topics such as "Business delegation accompanying high-level officials on their visit to the United States", "Heads of the eight major groups", and "The only private enterprise head of Tengda Songci" were prominently displayed, making her smile.
With delicate fingers like jade, she tapped the screen and opened an in-depth analysis by a financial blogger with millions of followers:
[Decoding the visiting business delegation: Why these eight?]
The blog post analysis is insightful:
China National Petroleum Corporation and China Construction Bank represent the national team of energy and finance, Donghai Automobile is a business card of high-end manufacturing, COFCO ensures people's livelihood, and electronics and pharmaceuticals are the driving forces of industrial upgrading.
The first seven are all state-owned enterprises, large central enterprises among the Fortune Global 500, and are as stable as a rock.
However, the most important signal comes from Tenda Technology Songci!
This Asian richest man is the only one of the eight leaders born after 1985, and the only private entrepreneur. What does this mean?
The country is elevating the development of the Internet and digital economy to a strategic level that is as important as energy, finance, and food!
The 4G license was just issued a week ago, and Tenda accompanied the visit. This is to take China's digital infrastructure and mobile Internet ecosystem to compete with Silicon Valley giants!
Liu Shishi's heart was filled with emotion as she read it, her eyes flashed with pride, and the corners of her lips unconsciously rose.
Seeing her husband's career reach new heights, she felt a sense of pride and joy in her heart, as if she had personally participated in this business event.
Happy to give this insightful blog post a thumbs up, and continue reading the comments below.
"This is so impressive! This lineup! Boss Song standing shoulder to shoulder with all the big guys with the Chinese character in their names is truly impressive."
"I don't understand those complicated analyses, but they must be amazing! Song Ci looks even more handsome standing among a group of old guys! [licking screen]"
"This list can be called a 'national business card.' The top seven state-owned enterprises are the foundation of the real economy, representing China's hard power and ballast.
As a leader in the digital economy, Tenda Technology embodies China's soft power and future vision."
"Yi Yi, it should be over the Pacific Ocean now." Liu Shishi whispered to herself, her eyes full of tenderness.
Just as she was about to browse other news, there was a knock on the door.
"Come in."
Lin Xia pushed the door open and walked in, followed by several middle-aged men in suits and ties: "Senior Sister Shi, the Standard Chartered Bank people are here."
Seeing the presence of Chen Deming, CEO of Standard Chartered Bank's Mainland China Region and President of its Donghai Branch, Master Liu stood up from her rocking chair, her dress swaying slightly as she walked to the wooden tea table beside her, behaving gracefully.
"Thank you, President Chen, for visiting the crew. The set is simple, so please forgive me if we are not well-received."
"Wait outside for a moment," Chen Deming instructed his assistant, then walked into the room with a respectful smile on his face.
"Mr. Liu, you are so polite. You are a valued customer of our bank. Customer satisfaction is our consistent goal."
"Xiaoxia, make a pot of good tea for President Chen."
"Okay, Senior Sister."
As the tea was served and the aroma lingered, Liu Shishi got straight to the point: "President Chen, after our previous discussions, you must have understood my intentions. I believe you came here today with some preparations."
Chen Deming nodded with a smile, a hint of caution flashing in his eyes.
Even if we ignore Liu Shishi's special identity as the wife of Asia's richest man, an acquisition case involving hundreds of millions of dollars is enough to make Standard Chartered Bank pay great attention.
He secretly looked at the beautiful woman in front of him and couldn't help but sigh at her extraordinary demeanor.
He took out two beautifully bound documents from his briefcase and handed one of them over respectfully:
"Mr. Liu, please review this. This is the due diligence report on Asia Television compiled by our bank. It's detailed and the data is accurate."
Liu Shishi took the document, flipped through it with her slender fingers, and read it carefully.
While she was reading, Chen Deming explained in a professional and cautious tone: "If Mr. Liu is interested in acquiring Asia Television, there are two paths to choose from.
One is equity acquisition, directly purchasing shares held by ATV's original shareholders.
This method can inherit ATV's original brand, license, business relationships and contracts, but it must assume all its debts, litigation and other potential risks.
This path will get your ATV up and running the fastest for you.
The second is asset acquisition, which only acquires ATV’s core operating assets, such as equipment, copyrights, trademarks, etc., without taking over the company’s main body.
This method can effectively isolate ATV's original historical debts and risks, but the disadvantage is that it needs to reapply for a television broadcasting license.
Furthermore, the existing employee labor relations and cooperation agreements all need to be re-processed, which is a rather cumbersome process.”
Upon hearing this, Liu Shishi raised her eyebrows slightly in disapproval, and parted her red lips: "The most precious thing about ATV is its television license. If we lose this, what value will ATV have?"
Both of them knew tacitly that the free television broadcasting license held by ATV was indeed a precious and heavy "crown".
Behind this license is decades of brand accumulation, a pass to enter Hong Kong's mainstream public opinion, and an important bridge connecting the Guangdong-Hong Kong-Macao Greater Bay Area.
After a brief pause, Chen Deming carefully considered his words and kindly reminded: "Mr. Liu, according to investigations, given ATV's current operating conditions, the Hong Kong Communications Authority is very likely to refuse to renew its license.
This means that if the license is acquired at this time, its validity period may be less than two years, its long-term value is highly uncertain, and its preciousness is greatly reduced.”
After a pause, he added, "This move is like trying to pull chestnuts out of the fire. Mr. Liu needs to treat it with caution."
Liu Shishi waved her hand calmly, her demeanor composed. "If I decide to acquire Asia Television, I will take care of the license renewal myself. President Chen, don't worry about it."
Now the entire Hong Kong circle is showing goodwill to Tengda. If she takes over ATV, there will be someone to help with the licensing issues.
Even if not, the issue can be properly resolved by asking the Fok family or the Hong Kong Olympic Affairs Office to step in.
Having fulfilled his obligation to warn of risks, Chen Deming said no more and tactfully sipped his tea.
Liu Shishi continued to look through the documents, and when she saw the financial indicators, she couldn't help but frown.
ATV's operating conditions were more severe than she had expected, which made her gasp.
The loss is secondary. The HK$1.09 billion debt has put ATV in a serious insolvency situation, which is simply a bottomless pit.
What's worse, cash flow has dried up, with cash flow from operating activities being negative HK$43 million.
This means that ATV's main business operations are not only unable to generate profits, but are also continuously consuming funds. It is only relying on shareholder transfusions to barely survive, and is only on the verge of survival.
At this moment, Liu Shishi weighed the pros and cons and began to think about giving up.
She bit her lower lip lightly, her eyes once again scanning the shocking figures on the document, and her husband's words that night flashed through her mind.
After careful consideration, I finally decided to buy the company. Since my husband had said there was still room for improvement in ATV, it must have value.
Moreover, her acquisition of Asia Television was not a simple financial investment, but rather she saw its irreplaceable strategic value.
The channels to directly reach mainstream families in Hong Kong and the right to speak in public opinion in the Guangdong-Hong Kong-Macao Greater Bay Area are wealth that cannot be measured by money.
If drastic reforms can be implemented to revitalize Asia Television, it will help Tenda Technology extend from online to offline, connecting the mainland with Hong Kong and Macau.
It can also be used as a springboard to help Tengda Group enter the Southeast Asian market.
After figuring this out, the last trace of hesitation in Liu Shishi's eyes instantly vanished. She then raised her head and looked at Chen Deming with a sharp gaze:
"President Chen, if we want to acquire ATV's shares and restore its normal operations, how much capital will we need to invest besides the acquisition costs?"
Upon hearing this, Chen Deming couldn't help but look at the seemingly weak woman in front of him with admiration.
I originally thought that the wife of the richest man was just acting on a whim, but I didn't expect her to be so courageous.
He had been prepared for the expense issue and was confident in it. He leaned forward slightly and turned to the last page of the hardcover report.
He tapped the summary table above it with his fingertips: "Mr. Liu, please look here. The main cost components are clearly listed for you."
Liu Shishi lowered her eyes as she was told, and saw that the items and amounts in the form were clear.
"Given that ATV is currently seriously insolvent," Chen Deming explained in a steady voice, "the equity acquisition only requires a symbolic payment of HK$1.
The actual bulk of the expenditure is debt repayment, totaling approximately HK$1.1 billion.
In addition, to maintain Asia Television's basic operations, it needs to invest approximately HK$10 million per month, which translates to approximately HK$120 million in annual basic operating costs."
He spoke at a steady pace and listed the capital investment details clearly and concisely, demonstrating extremely high professionalism.
"Mr. Liu!" Chen Deming changed the subject, his expression serious. "However, merely maintaining survival is merely a lasting survival. If you wish to revive ATV, you must plan ahead and invest in the future.
This includes upgrading aging equipment, investing in new program production, and purchasing high-quality copyrights, all of which are expected to require an additional investment of HK$200 to HK$300 million."
After a brief pause, he offered a concluding judgment: "In short, if you decide to take over this mess at ATV, you'll need to prepare at least HK$1.2 billion in initial capital to be able to handle it with ease."
Liu Shishi's gaze lingered on the "Debt Settlement" column for a long time, her fingertips tapping the table unconsciously, as if she was thinking about something.
After a moment, he slowly raised his eyes, a shrewd calculation flashing in his eyes: "President Chen, this debt of 1.1 billion Hong Kong dollars, is there no room for compression?
The major shareholder has run ATV into a mess, yet they want to make no loss at all and let the newcomer take over in full. Is there such a sure thing in the world?"
Upon hearing this, Chen Deming's expression became even more cautious, and he carefully chose his words to answer, "Debt restructuring is a matter of many variables. The specific plan and possibilities will only become clear after we contact the creditors."
Liu Shishi nodded slightly, not surprised by the answer, but her attitude was very firm: "In that case, we must do our best to reduce the debt!"
Without beating around the bush, he replied directly, "President Chen, I am determined to win ATV!
I believe in the credibility and strength of Standard Chartered Bank. As long as the price is fair, I will leave this acquisition to your bank."
Chen Deming's brows lit up at the words, and he quickly bowed. "Thank you, Mr. Liu, for your trust and confidence in Standard Chartered and myself! I will do my best to live up to your expectations."
"Don't bother two people with one thing." Liu Shishi smiled slightly and said calmly, "I'm also planning to borrow money from Standard Chartered Bank for the acquisition. President Chen, why don't you just name your price directly?"
"A financing demand of one billion Hong Kong dollars!" Chen Deming was naturally delighted to receive such a large business, and his mind began to calculate rapidly.
Liu Shishi did not urge her, but lowered her eyes again and turned her attention to the document in her hand that introduced the lineup of ATV channels.
The paper lists the Hong Kong Channel, International Channel, Asia Channel, Voice of the Times, and even the "Asia Television Information and Entertainment Channel" which is currently under preparation.
This profound foundation and complete channel structure made her more determined to acquire ATV.
Chen Deming pondered for a moment before tentatively asking, "Mr. Liu, for this HK$1 billion loan, do you plan to use Asia Television's future equity as collateral?
Or should you consider using other high-quality assets as collateral, or seek personal joint and several liability guarantees?"
Liu Shishi asked with interest, "What's the difference in interest rates between these two loan methods?"
Chen Deming immediately gave a professional and detailed explanation: "Frankly speaking, given Asia Television's current operating conditions, its equity is not a high-quality collateral recognized by banks.
If equity is used as collateral, considering the risks involved, the annual interest rate must be at least 12%.
But if you are willing to provide hard currency such as gold or real estate as collateral, or if you ask Mr. Song to act as a guarantor, I can lower the annual interest rate to 5% based on his excellent reputation."
"Gold?" When Liu Shishi heard this, she suddenly had an idea and asked, "President Chen, what is the market value of the gold I currently have stored in the Standard Chartered bank vault?"
She suddenly remembered that the 500 gold bars she bought after selling her courtyard house at the end of 2011, as well as the gold bars she bought later, were all deposited in the Standard Chartered vault.
Upon hearing this, Chen Deming's expression instantly became somewhat unnatural, and he replied cautiously: "You have a total of 1,200 500-gram gold bars in the Standard Chartered vault.
The current international gold price has fallen to about 280 yuan per gram. Based on this calculation, the total value of this batch of gold is about 168 million yuan.
"It's fallen so much!" Liu Shishi couldn't help but exclaimed, frowning.
She remembered clearly that when she made a large purchase two years ago, the price of gold was 380 yuan per gram.
A rough estimate, including the subsequent cost of purchasing gold, showed that the paper loss on this batch of gold had already reached a whopping 50 million! A huge feeling of frustration instantly washed over me.
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(End of this chapter)
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