Chapter 115 - Acquiring Wardley Company
He was no longer just a small figure; he was now the chairman of a publicly listed company in Hong Kong. Therefore, after a staff member reported his arrival, Lin Haoran was able to meet with the Chairman of the Securities and Futures Commission, Mike Smith.
Mike Smith, like most of the senior officials in the colonial Hong Kong government, was British.
During this period, nearly all top government positions, including the Governor and other senior roles, were held by British appointees, with very few Chinese high officials.
Senior administrative posts were almost entirely monopolized by the British.
"Mr. Smith, good afternoon! I'm very sorry to disturb you at this time, but I have received the official letter from the Securities and Futures Commission regarding the privatization process of Qingzhou Cement Company.
Overall, I support the initiative, but after careful consideration, I find myself facing a difficult situation that compels me to seek your advice," Lin Haoran said politely and directly as both parties sat down.
"Mr. Smith, my main concern lies with funding arrangements.
I fully understand the Commission's requirements and agree in principle.
However, the reality is that to acquire control of Qingzhou Cement Company, I had to use extensive loan financing.
Nearly half of the shares I hold were purchased with debt, and the shares themselves were pledged as collateral.
Here is the detailed loan contract from Hang Seng Bank.
If you wish to verify its authenticity, I am confident you will find it accurate."
"Under such conditions, although I feel responsible for following the Commission's directive to proceed with privatization, I am financially incapable of doing so at present.
Therefore, I sincerely hope you can provide some advice or guidance to help me find a feasible solution that satisfies both the Commission's expectations and my current financial realities," Lin Haoran explained sincerely.
Mike Smith took the Hang Seng Bank contract Lin Haoran handed over, carefully reviewing it.
The contract clearly stated that Qingzhou Cement Company shares were used as collateral.
After reading, Mike Smith showed little emotion.
For him, handling Qingzhou Cement Company's matter was merely part of his official duties.
Those British shareholders involved were not particularly significant in his eyes.
In terms of work priorities, major institutions like HSBC or Jardine Matheson were worth his full attention — Qingzhou Cement Company was not.
Nonetheless, maintaining professional courtesy, Mike Smith said,
"Mr. Lin, I completely understand your current difficulties.
Based on your situation, I can offer you two possible directions for your consideration."
"First, you could attempt to raise the necessary funds to continue the privatization process of Qingzhou Cement Company.
During this time, you can negotiate with other shareholders to set a reasonable acquisition timeframe and price.
Please note that the price suggested in the Commission's letter is only a recommendation, not a mandatory requirement.
If you believe the suggested price is inappropriate, you are fully entitled to negotiate a mutually acceptable agreement with the shareholders."
"Second, an easier option would be for you to consider selling some of your shares to reduce your stake below 50%, thereby avoiding triggering the full takeover obligations outlined in the Hong Kong Takeovers and Mergers Code.
However, if you decide to pursue this path, I suggest acting promptly to avoid causing unnecessary issues for the Commission."
"Mr. Lin, these are merely my personal suggestions.
I hope they help with your decision-making.
If you have no further questions for now, that will conclude our discussion.
I have other appointments to attend.
Should you have any future inquiries or need further assistance, you can contact me during office hours.
Here is my business card," Mike Smith said as he handed Lin Haoran a card, clearly signaling his desire to end the conversation quickly.
Perhaps after reviewing Lin Haoran's loan contract, Mike Smith realized Lin Haoran lacked the financial means to profit from his British compatriots, thus choosing to point out the key points plainly.
Lin Haoran accepted the card, smiled, and said,
"Very well, Mr. Smith. Thank you very much for your guidance today.
It has been extremely helpful.
I won't take up more of your time. Goodbye."
He courteously pocketed the card and left the Commission building feeling relaxed and optimistic.
For Lin Haoran, today's brief meeting marked a turning point.
His doubts were cleared, and more importantly, he now saw a new path forward.
His mood was like clouds parting to reveal the sun, or a dark alley opening into a bright vista.
The takeover code, initially a headache, now seemed manageable.
Since the code did not mandate a specific acquisition price, he had the right to reject the Commission's recommendation — as long as he handled shareholder relations properly.
His father Lin Wanan's overly cautious mentality — fearing government retaliation — now seemed unnecessary.
From Mike Smith's tone, Lin Haoran could sense that the Commission wasn't deeply invested in the matter, nor was there much risk of offending them.
Although the privatization timeline had been forced to accelerate, Lin Haoran wasn't overly anxious.
Privatizing Qingzhou Cement Company had always been part of his plan; the timing was just being moved up.
As for the funding, Lin Haoran already had ideas.
Loans might be necessary — they were the most direct and effective solution.
Although it would temporarily increase his financial burden, successfully completing privatization would render these difficulties insignificant.
Thinking of this, Lin Haoran quickened his pace, filled with anticipation and confidence.
There was no urgent need to worry about funding — not yet.
When the time came, he would find a way — but he refused to be taken advantage of.
Leaving the Securities and Futures Commission, Lin Haoran went directly to Qingzhou Cement Company.
"Boss, how should we respond?
Just over an hour ago, several reporters came to the company hoping to interview you," Burton asked as he approached Lin Haoran's office.
"Reporters came to interview us?
How did they find out so quickly?" Lin Haoran asked, surprised.
"I'm not sure.
We only received the Commission's letter two hours ago, and they arrived shortly afterward.
I also find it curious how they knew so fast," Burton said, baffled.
"Burton, how much do you know about the other board members?" Lin Haoran asked.
"Not much.
They usually only show up for board meetings.
However, two shareholders recently approached me, trying to find out about your future plans for Qingzhou Cement Company.
Since you weren't in Hong Kong at the time, I told them you hadn't announced any plans yet," Burton replied.
Lin Haoran nodded.
He was now certain the shareholders had leaked the story to the media, hoping to stir up trouble.
Clearly, those shareholders no longer wanted to hold onto their Qingzhou Cement Company shares.
But finding buyers was nearly impossible.
A company already under firm control by one party — and led by an inexperienced young man — was hardly attractive.
If they made enough noise, public opinion in Hong Kong would force Lin Haoran's hand, making privatization inevitable.
"Burton, do you have any suggestions?" Lin Haoran asked.
"Boss, after receiving the letter, I reviewed the Hong Kong Takeover Code.
If you don't plan to privatize Qingzhou Cement Company, you must reduce your holding below 49.99%.
Otherwise, you will indeed be required to privatize."
"If you do intend to privatize, I believe this might be an excellent opportunity.
The Code does not mandate that the acquisition price must match the highest price from the past six months.
You can refuse the Commission's recommendation and announce your intention to privatize at a reasonable price."
"Given the market's current low confidence in Qingzhou Cement Company, setting a moderate price should allow the acquisition to proceed smoothly without much backlash."
"As for the British shareholders on the board, I suggest convening a board meeting to negotiate a buyout price acceptable to everyone.
Once agreement is reached, the matter will be settled."
"I recommend hiring Wardley Company to manage the privatization process.
They specialize in acquisitions, privatizations, and corporate advisory services, and are backed by the powerful HSBC Group.
They're handling Mr. Bao Yugang's takeover battle for Wharf Holdings right now."
Burton's suggestion perfectly aligned with Mike Smith's advice, offering Lin Haoran a clear, detailed path forward.
"Wardley Company?" Lin Haoran repeated.
"Yes, boss.
Wardley is a wholly-owned subsidiary of HSBC, though it operates independently.
They handle securities underwriting, corporate consulting, acquisitions, mergers, financial investments, and medium-to-long-term loans."
"With HSBC as their backer, Wardley has enormous clout.
They excel at complex transactions.
That's why Bao Yugang chose them to be his financial adviser in the Wharf takeover battle," Burton explained patiently.
Lin Haoran's brows relaxed, and he smiled in sudden understanding.
"I see. Very good.
Then let's leave the privatization of Qingzhou Cement Company to Wardley Company."
"As for the official company announcement — let's hold off for now.
I want to observe how the market and the media react.
Tomorrow's headlines should be lively.
Let them talk for a while," Lin Haoran said with a laugh.
Thank you for the support, friends. If you want to read more chapters in advance, go to my Patreon.
Read 20 Chapters In Advance: patreon.com/Albino1