The Chaebol Who Flies From Space - Chapter 57



Only Noblemtl

57. Reorganization of the governance structure (2)

“Under a father who pursued stable management, an extremely aggressive child emerged. Do you know how nervous President Dongwon was when I first said I would run a company? The investment company was fine, but when I suddenly said I would acquire a soju company, President Dongwon was so worried that he couldn’t sleep at night.”

Even though my father didn’t tell me, it seemed like he was quite worried.

“I just let it go because he didn’t say anything to me.”

“President Dongwon nags a lot, but he is a deep person. Our food business grew because President Dongwon was in charge.”

“The company has grown since we entered the ramen business. Thanks to the Seolleongtangmyun made by CEO Yongwon, the company has been growing like crazy these days.”

“Are things going well?”

I was so busy with other things that I couldn’t pay any attention to it.

“Yes, we are exporting like crazy to the Chinese market. Our domestic market share has also increased to more than half. If we had not exported overseas rather than to the domestic market for profitability, all our competitors would have fallen away.”

“It means that you are giving your competitors room to breathe and live.”

“Isn’t that your grandfather’s temper?”

“He is a good person.”

I have lived a long time, but I have never seen a person with such great character as my grandfather. Others may say that it is not so special, but it is truly amazing that he has consistently maintained his own thoughts while running a company.

People become weak in the face of greed.

There are many cases of people dying for a little money, but I have been saving the lives of those in need with the profits I have made while running the company.

“We will significantly increase our accounting and auditing staff. How much will we increase them?”

“Increase without limit. Samjeong is good at it. You’ve heard the saying, “The three principles of management.” You shouldn’t squeeze people to that extent, but you shouldn’t make them think about stealing.”

I have seen many times that people’s minds change at any time.

When you face reality, greed naturally arises.

Rather than hoping that people’s hearts will not change, we should prevent theft through the system.

“I understand what you mean. If there are rats running around in the barn, you have to kill them.”

“You have to clean it up in advance. You also have to block any holes where mice can come in.”

I felt relieved because it seemed like President Park clearly understood what I said.

I sat in my office and waited for my uncle.

His uncle, President Cho Dong-jin, was busy taking over an oil refinery. He was making a fuss, saying it would be simpler to just leave the work to WD Investment’s M&A team, but he wanted to do it himself.

“This building is quite large. Is it for rent?”

“I bought it whole.”

“Since they have a lot of money, they buy buildings like this one after another.”

I talked to my uncle for a while about how much the buildings around here were worth.

When I roughly told him the price of the building, my uncle clicked his tongue.

“If I had known that the property prices would rise like this, I would have bought land around here a long time ago. This area was originally designated as a residential area, so it didn’t take long. Even though I had money, I didn’t have an eye for land.”

“Have you decided which company to acquire?”

“Yes, we are trying to acquire the insolvent Gyeongin Energy.”

It is difficult for oil refineries to build new plants because the initial facility investment is large and the pollution generated is also large.

It will take a month to expand before you can get permission to do so.

Gyeongin Energy was a refinery company established through a joint venture between Union Oil and Gunpowder Group. It was later sold to Hyundai Oil Refinery as its management worsened after Union Oil withdrew.

During the IMF crisis, the company’s financial situation worsened and it went bankrupt and was under court receivership.

“There really isn’t a place that would be a good fit for the takeover.”

When I heard that my uncle was going into the oil refining business, I looked into it, but the only answer was Gyeong-In Energy.

“How much did the bondholder bank ask for?”

“Oh my! They asked for 630 billion won. I raised my hands and feet in protest after hearing the acquisition price they were talking about.”

It was an absurd price to anyone who looked at it.

“That’s an incredibly expensive price for just one factory.”

“It’s because we have a lot of debt from the bank. The main creditor bank, Doori Bank, said they would lend us the acquisition funds, but they asked me to put up my share of our food company as collateral.”

My uncle was shocked during the takeover process.

“That’s just nonsense. You’re saying you’re going to exchange company stocks that you wouldn’t take even if they were given to you for free for our food stocks. That’s ridiculous.”

The new business venture that was eagerly challenged was put on hold from the start. The acquisition cost of over 600 billion won was burdensome and the price demanded was excessive compared to the company’s value.

“The debt will probably exceed 1 trillion won, but the acquisition price is too high. If the economy continues to improve in the future, the interest burden will be considerable.”

The reason why Gyeongin Energy, which has only one factory left, has so much debt is because it has pushed in all the bad debts of modern oil refineries.

“If we can’t solve the debt problem, it’s worse than not doing it at all. If the debt is 1 trillion won, the interest alone will be over 80 billion won, and at the current oil price level, we’ll have to run the company at a loss.”

How much of a refining margin does an oil refinery have to eat to afford a trillion-dollar debt? Even if you buy crude oil at $30 a barrel and refine it, you won’t even make $2 a barrel.

Gyeongin Energy’s Incheon plant has the capacity to refine 50,000 barrels per day, but that is not enough to cover the interest on its debt.

Oil prices have to rise above $50 to barely cover interest payments.

“I can’t help it. I have no choice but to give up. I came to you to ask you to lend me the funds I lack for the acquisition, but when I think about it, if the price you’re asking for is right now, there’s no answer even if I acquire it. I’ll have to look for another company.”

“Good idea. Let me think about it a little more.”

I felt bad because my uncle’s shoulders looked narrow as he left my office.

“Iriel, is there no way?”

[There is no way. Duli Bank needs to reduce its debt, but that is not the case. I think they are probably thinking that there is a master behind this acquisition and are being more aggressive in negotiating the price.]

“Because I have a lot of money?”

[That’s right. If you pump out oil, you have to refine it. If you take over Gyeongin Energy, who would see it as your uncle’s business? If you talk to the government, they’ll probably take the same stance.]

“Even if I eat it raw, it’s not enough, so I don’t feel like buying it for more than its price. I guess I’ll have to give up.”

I discussed the acquisition issue with Team Leader Jeong Gi-ha, who happened to come to report on the Alibaba stock issue.

“If it’s $150 million for a 10% stake, then they’ve shown their sincerity.”

“It feels too expensive, but I did my best because the chairman desperately wanted to acquire the shares.”

This person is capable and good in every way, but he is over-excited.

Judging from the fact that he brought in Alibaba’s shares, which he had almost given up on, he certainly had the ability. I looked at the share acquisition contract documents he brought.

“It’s a contract that guarantees the subsidiary’s shares.”

“We bought the shares at a high price, so of course we have to guarantee the shares if we create a subsidiary.”

It was a very satisfactory contract because it included special provisions that I had not thought of.

“What is the Chinese reaction to Fire Striker?”

“Fire Striker? You mean the game that was renamed to Hot-Blooded Warrior? That’s a huge hit. It’s not quite as crazy as it sounds, but it’s popular.”

“What do you mean by lacking?”

Team Leader Jeong spoke while looking at my expression.

“The game is well-made, but isn’t that the case in China yet? There aren’t many people with computers that can properly play Hot-Blooded Warrior. The number of game rooms is increasing in China, so this will gradually be resolved. Users who have tried the game once say they go crazy.”

“What does Tencent CEO Ma say?”

“I say that I need time, but my mouth is still hanging on my ear. The new market I entered shows potential.”

Even in my view, the Chinese IT industry still needed time to grow.

“I think it would be better to distribute Passionate Warrior in Korea as well. Once you start playing the game, it’s hard to put it down. I think it will be incredibly popular in Korea as well.”

“Really? What did the vice president say?”

“It was a subtle suggestion from your side. They said there would be no problem since they own all the game IPs.”

That was right.

I had forgotten about it because I was busy with other things, but I thought it wouldn’t be a bad idea to distribute the game in Korea.

“I think I should create a gaming company in Korea. No, let’s just buy one. Find a company that’s worth acquiring.”

“All right.”

As soon as I finished speaking, Team Leader Jeong started thinking about the acquisition target in his head, and I brought up what I had been keeping in mind.

“Team Leader Jeong, have you heard of Gyeong-In Energy?”

“Isn’t that a bankrupt oil refinery? I understand that it was handed over to the Gunpowder Group because it was continuously in deficit, and then went bankrupt.”

“You know it well, right?”

“You’ve been in the M&A market several times. But you’re thinking of acquiring Gyeongin Energy? Since you have oil fields, if you succeed in acquiring it, it will be a good portfolio.”

“No. There is too much debt there, so it would be difficult to acquire it. The acquisition price they are asking for is also expensive. It wasn’t me, but my uncle who tried to sound out the acquisition, but I don’t think it would be possible.”

“How much did you ask for?”

“They asked for 630 billion.”

“He’s a robber without a knife. It’s like saying that he won’t sell a company that has already failed and has a lot of debt. If you buy it at that price, you’ll be called a sucker. 630 billion won? Even 100 billion won is a waste. If that company isn’t bought by someone like the chairman who has the genes, it will continue to suffer losses. The creditor banks are too greedy.”

“Is it that bad of a mess?”

“Since it is a factory built in the 70s, if we acquire it, we will need to make a large-scale facility investment. Since it is a company that has been continuously losing money, would they have made proper investments? In addition, since it does not have its own gas station, it is a company that cannot sell at retail. It would be better not to acquire it without analyzing it. In cases like this, as time passes, the acquisition price that the seller wants will also decrease. Time is the answer. If we wait, they will not be able to ask for an outrageous price like they are now.”

After sending Team Leader Jeong away, I thought about it for a while. I thought it would be better for my uncle to run the game company. So I called him to ask him what he thought.

“Are you really trying to acquire your uncle’s petrochemical company?”

– I wanted to take over the business because I thought it would be easy to manage since you have the genes, not because I like it.

It was just as I thought.

“How about a game company?”

– A game company? I used to be a game fanatic, although I don’t play games often because I have to watch my wife’s face. I almost got kicked out of the house recently for playing Baldur’s Gate all night.”

No! What kind of oil refinery is this guy?

“Then, how about running a game company? I have a game that I bought and it’s doing well in China. People are saying, ‘Why don’t we distribute it in Korea?’”

-Yeah, you said the game was fun.

“I heard you’re doing well. Do you have any thoughts?”

– I’ll try it once and decide. A game company? Why didn’t I think of that? If you run a game company, your wife won’t be able to nag you about playing games, right?

Somehow I could sense excitement in his voice.