dkrc Chapter 23: The Transaction Completed, HK Electric Acquired
Chapter 23: The Transaction Completed, HK Electric Acquired
Wednesday, September 13.
1 Queen's Road! HSBC Headquarters.
After receiving a call from HSBC, Li Jiagang went there immediately. If Sir Michael Sandberg was looking for him at this time, it must be because there was a result regarding the Hong Kong Electric matter.
On Sunday, an agreement was reached with Pao Yue-kong and a contract was signed. However, the shares have not yet been transferred because HK Electric has not yet determined the price.
According to the contract, the price of their "Wharf Holdings" shares will be determined based on the latest quoted price at the opening of the market on Monday.
By the close of trading last Friday, Wharf Holdings' share price had risen to HK$45.98, and it opened sharply higher on Monday at HK$47.12 per share.
Li Jiagang was already very satisfied with the price of the transaction.
The reason why the market rose so much at the opening on Monday was that Bao Yugang's announcement of entering the market stimulated the market.
But Li Jiagang knew that once Wharf Holdings' prices reached the HK$50 mark, they would gradually slow down. After that, Pao Yue-kong and Jardine Matheson would control the price together, and within a few months, Wharf Holdings' prices would fall back to around HK$25 per share.
Three days have now passed.
Given Sir Michael Sandberg's prestige at that time, Li Jiagang believed that he must have resolved the "Hong Kong Electric" matter within three days before contacting him.
Hong Kong Electric is a public utility in Hong Kong. No matter how chaotic the company is internally, the British Hong Kong government would not allow someone of "unknown origin" to hold a controlling stake.
Therefore, if Li Ka-shing wanted to acquire Hong Kong Electric, without Sir Michael Sandberg's intervention, he would have had difficulty even obtaining the necessary qualifications, let alone directly controlling the company.
He didn't want more.
In the early stages, it would be sufficient to hold a 30% controlling stake in HK Electric.
With a 30% stake, he could take control of HK Electric and become its chairman. He would then use HK Electric's land holdings to expand his real estate business.
With anticipation, I entered Shen Bi's office, where Bao Yugang and the other man were already inside.
"Young Master Li is here, please have a seat."
"Thank you, Sir Michael Sandberg and Sir John Paul Wong."
"Congratulations, Mr. Li..." Bao Yugang said with a smile, gently setting down the purple clay teapot, the aroma of tea rising gently. "Sham Bi has secured absolute control of Hong Kong Electric for you. After that, Hong Kong Electric will be yours for the taking."
Upon hearing this, Li Jiagang's eyes lit up.
"Absolute controlling stake in HK Electric?"
"Does that mean more than 51% of the shares?"
If that's the case, Li Ka-shing would be overjoyed. However, although HK Electric's current profit is not high, it is still a large public utility company, and its market value, even at its lowest, is HK$6-7 million.
Given that he owns 51% of the shares, wouldn't he have to pay at least HK$3.5 million?
Why would HSBC lend him so much money?
Lijiagang lacks confidence in addressing this issue.
Just then, Shen Bi walked over.
"Li! Please wait a moment." Sir Michael Sandberg handed him a report and said, "Although the Hong Kong government has agreed to let you take over the Hong Kong Electric Group, there are still some requirements. We need to discuss them further."
"What are you talking about?" Li Jiagang asked, puzzled.
Before Shen Bi could respond, and without giving Li Jiagang time to review the report, a knock sounded on his office door.
"Come in."
"Boss, Mr. Jackney has arrived."
"OK, let's go to the conference room and discuss it together," Shen Bi said.
Li Jiagang followed Shen Bi to a meeting room, puzzled. This time, Bao Yugang did not come. He wondered what they were going to talk about.
He was calculating in his mind that if Shen Bi wanted to use this to control him and demand that he pledge allegiance to HSBC, he would never agree to the terms. At worst, he would immediately have all the Wharf Holdings shares sold off to cash out.
Upon entering the conference room, Li Jiagang saw two people wearing British Hong Kong government badges sitting inside.
"People from the Hong Kong government?"
Before he could guess their background, Sir Michael Sandberg's voice rang out. "Li! This is the representative sent by the British Hong Kong government to oversee these negotiations."
"Mr. Shen Bi, is there anything else to discuss?" Li Jiagang asked, his tone slightly displeased.
He and Pao Yue-kong traded on equal terms; Hong Kong Electric was merely an additional condition in the deal. It wasn't that he actively sought to buy Hong Kong Electric or had to humbly accept their demands.
Sensing the change in Lijiagang, Shen Bi quickly said, "Li! Don't worry." He then took out the report again and said, "Listen to this."
Li Jiagang took the report and read it carefully.
"First, the relevant departments urgently convened three rounds of closed-door meetings," the Hong Kong government official said calmly, but with every word carrying weight. "The opposition from British capital is immense, especially from Swire and Jardine Matheson. They claim that your background is 'unclear and your motives are suspicious,' and they are worried that there will be a problem with the Hong Kong Island power system being damaged."
"And because HSBC stepped forward to vouch for it."
"Ultimately, the Hong Kong government approved Mr. Li's takeover of Hong Kong Electric Company, and HSBC will help you directly control 51% of the shares in terms of funding and shareholding."
"But there are three transitional conditions."
"First: Hong Kong Electric is a vital public utility on Hong Kong Island, and there has never been a precedent of Chinese people leading the company. The British Hong Kong government needs a guarantee."
The entire 51% stake in HK Electric needs to be pledged to HSBC as oversight. You will retain control of the company's management and decision-making, while HSBC will not interfere in any company affairs for a period of three years.
"What do you mean?"
At this moment, Li Jiagang's brows were tightly furrowed.
Shen Bi gestured for him to calm down, saying, "Li, don't rush. Let's discuss this after you've finished explaining the issues, shall we?"
Li Jiagang could only suppress his dissatisfaction and nod.
"Second: To ensure the safety of the power supply system and not to affect the normal development of Hong Kong Island."
If there are no problems with the power supply system, profitability, management and operation of Hong Kong Electric within three years, HSBC will fully unfreeze the Hong Kong Electric shares and transfer them to your personal name.
(Personal loan debts are not covered by the regulations)
However, during this period, due to major accidents caused by management issues, intentional and frequent or prolonged power shortages, human-caused damage to power units, and leaving Hong Kong Island without power, the British Hong Kong government had the right to unconditionally take back control of the company.
In serious cases, it could lead to an investigation by the British and Hong Kong governments.
"Third: Accept the unified electricity price monitoring of the British and Hong Kong governments and do not disrupt market order."
However, operators have the right to request price adjustments, which will be approved by relevant authorities within a reasonable range.
Even changes that better ensure the safety and convenience of power supply on Hong Kong Island will be supported by relevant departments.
"This is a strict requirement from the British and Hong Kong governments regarding Hong Kong Electric's move from public to private ownership."
Li Jiagang listened attentively throughout.
At this moment, he was rapidly calculating the pros and cons of the three hard conditions put forward by the British Hong Kong government, and whether there were any traps or other issues.
At the same time, he also understood the importance of Hong Kong Electric. If HSBC hadn't stood up for it, the British Hong Kong government wouldn't have easily let a Chinese person take over.
He knew that this negotiation was not just a financial transaction, but also a political endorsement.
"Three years of surveillance?"
"If problems arise during this period, I may face huge debts, and Hong Kong Electric may also be confiscated."
The third point is not a big problem.
His mind was still racing, pondering the gains and losses of these three questions for him.
Is HSBC's willingness to stand up for him and pave the way for him simply because times have changed, and they are sparing no effort to support Chinese capital in order to make HSBC's future path easier?
But whenever he thought about the future importance of the old ship "Hong Kong Electric," Li Jiagang felt it was worth taking the gamble. He figured that as long as "Hong Kong Electric" didn't run into any problems during that time, the British Hong Kong government couldn't do anything to him.
At that moment, he made his decision.
He slowly raised his head, his gaze as firm as iron: "Master Shen Bi, I accept the terms... I, Li Jiagang, will remember your kindness."
Seeing that Li Jiagang agreed, Shen Bi secretly breathed a sigh of relief, and at the same time, his eyes were full of appreciation when he looked at him.
Soon after... this negotiation, which would affect the direction of stock trading and the change of corporate power, reached a consensus.
With a wholly-owned loan from HSBC, Li Jiagang acquired a 51% stake in Hong Kong Electric and also completed the transfer of Wharf Holdings shares with Pao Yuk-kong.
Of course, he will not be able to buy or sell his HK Electric shares normally for three years, as they will be frozen by HSBC for three years, but this will not have much impact on him.
As long as he does not cause power shortages or damage power units, HSBC and the Hong Kong government have no right to influence his decisions regarding Hong Kong Electric.