I Am the Third-Generation Heir of a Conglomerate - Chapter 430



Only Noblemtl

430. All-time (5)

Shipping companies’ debt amounts to approximately 8 trillion won.

There were currently three options available to the creditors.

The most extreme method was bankruptcy.

This was a method in which creditors divided up the assets sold after bankruptcy, and using this method, it was inevitable that not even 50% of the principal would be recovered.

The second method was for the creditors to directly manage the shipping company.

It was also possible to increase the value of the company and sell it at the original price or higher to make a profit.

But this method came with too many risks.

In order to increase the value of the company, more money had to be invested, and the size of the debt could have increased rather than decreased.

The last resort was, of course, selling.

In order to sell, some of the debt had to be forgiven by the creditors.

If there were many bidders, competition could be made to raise the price, but no one wanted to buy a shipping company that was losing money in the tens of billions of won every year.

Lee Myung-geol, chairman of the Industrial Bank of Korea and the representative of the creditors, chose the last resort.

After a brief pause, he announced his intention to sell and the debt forgiveness ratio.

“I would like to proceed with the sale of the shipping company on the condition that 10% of the debt is forgiven.”

“Is it 10% excluding the amount contributed by shipping company executives?”

“No. I will forgive 10% of the 8 trillion won in debt. That would be around 800 billion won. The condition is that you take over the shipping company after deducting the amount of private contribution from the forgiven debt.”

The conditions weren’t that bad.

If you add in the debt forgiveness and private contribution from the creditors, it would be possible to save close to 1 trillion won.

But it was also a slightly disappointing amount.

That is why I asked the question to the shipping company management, not to Chairman Lee Myung-geol.

“I understand that there was a clause for renegotiation of charter fees in the shipping company’s self-rescue plan. I would like to know how far the negotiations went.”

“… … We agreed to a discount of up to 15%. If we negotiate a little more, we may be able to get a discount of up to 20%.”

“Hyunjin Shipping also has the same conditions.”

The biggest obstacle to taking over a shipping company was charter fees.

When the topic of charter fees came up, not only the management but even the creditors frowned.

“The charter fee is frankly too high. It is set at 10 times higher than the current market price. If the shipping company is sold, Taewoo Group will have to pay a charter fee that is 10 times higher.”

“Hmm, if Chairman Kim himself steps in to negotiate, wouldn’t we be able to get a bit more of a discount?”

“To be honest, I have no intention of making money by acquiring a shipping company. I am considering acquiring a shipping company to ensure that exports by Korean companies, including Taewoo Group, are not hindered.”

“You have made a very difficult choice for the development of the Korean economy. I appreciate your decision, not as the chairman of the Industrial Bank of Korea, but as a citizen of the country.”

Everyone agreed with what I said.

With high charter rates and a slump in the shipping industry, no one believed that shipping companies would ever turn a profit.

It would have been crazy to take over a shipping company at this point, so I was in control.

“If we take over two shipping companies, we will see deficits in the tens of billions of won every year. Nevertheless, I intend to protect the shipping companies until the end.”

“In line with Taewoo Group’s noble intentions, we will increase the amount of debt forgiveness to 15%.”

Only 15%?

In the end, I had to bring up something I had been saving.

“If Hyunjin Shipping goes bankrupt, I understand that the liquidation value is approximately 2 trillion won. If Taewoo Group purchases all of its assets after bankruptcy, it will save 2 trillion won. Wouldn’t the same be true for Hyunjin Shipping?”

“Nothing has been decided yet regarding the bankruptcy of the shipping company. It is an excessive opinion.”

Chairman Lee Myung-gul’s words were not wrong.

The Blue House that pushed for the bankruptcy of Hyunjin Shipping has now disappeared.

So, if it went into court receivership, it was uncertain whether it would go bankrupt.

However, that does not mean that there is no possibility that the shipping company will go bankrupt.

“I know this is an excessive opinion, but the creditors’ conditions are also excessive. We cannot pay twice the amount of liquidation value.”

“… … Please give me a moment.”

Chairman Lee Myung-gul called the creditors together and held a meeting.

They would tap away at their calculators, write down numbers in their notebooks, and discuss things before they made me a new suggestion.

“We will raise the discount rate to 20%. Anything more than that is really impossible for us. If we were in a situation where bankruptcy was confirmed, then maybe 20% would be the best we can do for now.”

“You’re saying you’re giving us a discount of 1.6 trillion won?”

In fact, the conditions weren’t too bad.

The shipping industry’s recession will soon end, and when the Corona era arrives, shipping companies will make huge profits.

The surplus was large enough to make up for the deficits up to that point.

So, it would have been a profitable business to acquire two shipping companies for around 6.4 trillion won.

“Okay. I will enter into a contract to sell the shipping company under the above conditions. The management’s contribution of personal assets will be specified separately in the contract.”

“Thanks to the Chairman’s decision, the Korean shipping industry has been able to revive. I am truly grateful.”

All the creditors stood up and bowed their heads to me.

Now that you’ve paid off all your bad debts, you’re bound to feel good.

Of course, there seemed to be a little bit of concern about the Korean shipping industry.

“I’ll have the staff write up the contract. In the meantime, how about taking a short break? I’ll provide you with a break room at the Taewoo Group headquarters. It may not be hotel-level, but it’s enough space to take a short break.”

“Thank you. Excuse me for a moment. Phew!”

The long-running negotiations have finally come to an end.

The creditors let out a sigh that contained a lot of meaning and stood up.

However, Chairman Cho of Hyunjin Group kept his position until the end.

Do you have something to say to me? As I approached Chairman Cho, he spoke to me as if he had been waiting for me to do so.

“Why did you make this decision? Honestly, I thought you were waiting for Hyunjin Shipping to go bankrupt. Didn’t you have a contract with me?”

“I planned to do that too, but things turned out differently.”

They only take Hyunjin Shipping’s valuable assets.

This was the original plan, but the plan was changed to owning a mega shipping company through a big deal with a shipping company.

“Can you tell me why your plans suddenly changed?”

“The reason I became interested in shipping was to safely export Taewoo Group’s products. However, the more I learned about the shipping industry, the more I realized how absurd my plan was.”

“Even though Taewoo Group is the number one group in Korea, it is not possible to load only Taewoo Group products on all ships. If that is the reason… was it really necessary to take over the current merchant ship?”

As a shipping company grows, the amount of cargo it can transport increases.

If you take over two shipping companies, the volume will naturally double.

I also knew very well that if that happened, the burden on Taewoo Group would increase.

“The shipping industry seems to have shipping alliances that exist like cartels. It seems necessary to grow in size to join an alliance or to compete against an alliance.”

“I see, you insisted on a big deal because of the shipping alliance. It must not have been easy. Shipping alliances are really troublesome. Both Hyunjin Shipping and Hyunjae Merchant Marine suffered greatly because of the shipping alliance.”

Shipping alliances could be seen as essential for shipping companies.

Since the allies shared the cargo, they could always operate the ships with a certain amount of cargo.

During boom times, this may not matter, but in times of recession, shipping alliances are essential for shipping companies to prevent them from returning with empty ships.

“As soon as we complete the acquisition of the shipping company, we plan to contact the shipping alliance. With the merger of Hyunjin Shipping and Hyunjae Shipping, we will become one of the world’s top five shipping companies. Then, wouldn’t the shipping alliance offer us favorable terms?”

“You are taking the shipping alliance lightly. One of the reasons why the Korean shipping industry has become like this is because of the influence of the shipping alliance. I guess they wanted to ruin the Korean shipping industry so that shipping companies in neighboring countries could share in the profits.”

It was not something that could be dismissed as a conspiracy theory.

In fact, before the return, the shipping companies in neighboring countries were the ones who benefited the most after Hyunjin Shipping went bankrupt.

In particular, I remember that Chinese and Japanese shipping companies made huge profits.

“I want to meet him first and then decide.”

“It will not be easy to renegotiate the charter fee. Without renegotiating the charter fee, it is impossible to turn a profit.”

“I know. We need to solve the charter fee issue step by step.”

The charter fee negotiations had already been concluded.

Most of Hyunjin Shipping’s charter fees were contracts with a ship owner company called Sespan, and I had already negotiated with Sespan to receive a 50% discount on the charter fees.

Of course, 50% was an excessive amount.

Because it was still five times more expensive than the market price.

So, while negotiating the current charter fee, I was thinking of raising the discount rate even further.

“Please take good care of the Korean shipping industry. The Korean shipping industry is now in the hands of Taewoo Group.”

“You are putting too much pressure on me. But I can promise you that I will not give up the shipping business even if it means running at a loss like it is now.”

“Please take good care of me.”

It was Chairman Cho who spoke while holding my hand with both of his.

It was because he cared so much for Hyunjin Shipping, and perhaps because he had been going through a lot of emotional distress since the new administration came into power, he seemed to be overcome with a variety of emotions.

***

The shipping company’s big deal has been concluded.

The moment the contract was signed, the entire debt was remitted to the creditors in a lump sum.

At that moment, Hyunjin Shipping and Hyunjae Shipping were absorbed into Taewoo Corporation.

“Taewoo Corporation’s burden will increase again. The deficit has not been decreasing, and now Taewoo Corporation will have to shoulder the shipping company’s deficit as well.”

“It may be suffering from deficits now, but the shipping industry, mineral resources, and e-commerce industries will all experience explosive growth at the same time.”

Vice Chairman Han thought that he was putting too much of a burden on Taewoo.

That is understandable, as most of the business divisions were reporting large deficits, and the addition of the shipping industry further increased the deficit.

“The stock market is calling Taewoo Corporation the trash can. They are saying that all of Taewoo Group’s loss-making divisions will be dumped into Taewoo Corporation.”

“Tell him to say so. He’ll soon learn that it’s a jewelry box, not a trash can.”

Taewoo Corporation’s leap forward is only a few years away.

From shipping, mineral resources, and even e-commerce.

They all had one thing in common.

It was a business that experienced explosive growth when the Corona era arrived.

The moment the Corona era comes.

Taewoo Corporation grows into a key subsidiary of Taewoo Group.

Taewoo Sergeant was the one who would show explosive power that would more than make up for the humiliation he was receiving now.

“Since the Chairman said so, I will believe and follow it. And I received a call from Chairman Joo Sung-jae of Daehan Tire.”

“I see you’ve been contacted about investing in tire development.”

In order to produce electric vehicles, the development of tires specifically for electric vehicles was essential.

We were conducting joint research with the three major tire companies in Korea.

Among them, we are conducting the most active research with Daehan Tire, which has the largest tire market share.

“It seems like he didn’t just contact me about tire development. He said he definitely wanted to meet with the chairman and talk. If it’s about tire development, it would be enough to talk to the president of Taewoo Motors.”

“Chairman, you are close to eighty years old, aren’t you?”

“You will be eighty next year.”

There were few reasons why a conglomerate leader in his eighties would want to meet me.

It was clear that he had contacted me to share with me his concerns about succession, which are probably the concerns of all conglomerate leaders.