CH418 | heir

Until mid-January, the Chinese stock market continued to fall.

Even though Taewoo Group was repurchasing shares to cover its short positions, the stock price kept declining.

“The distrust toward the Chinese market is stronger than I expected. I thought buying back shares would halt the downward trend, but that’s not the case.”

“Most of the financial firms in the Financial Tower have followed our lead and begun the liquidation process. However, thanks to Wall Street, European, and Asian financial firms all moving opposite to us, we were able to secure substantial profits.”

We were not the only financial players in the market.

In fact, globally speaking, our share was not particularly large.

Of course, in absolute terms, the amount was significant, but it wasn’t enough for our actions alone to drastically shift market sentiment.

“They’ve been helpful. Thanks to them, the profit liquidation process could proceed fairly smoothly.”

“There were a few financial firms that voiced minor complaints, saying they could have gained more profit.”

“The choice is theirs. Why should they complain to us?”

“I conveyed the same message. If they want to continue short selling, they can do so on their own.”

The decline in the Chinese stock market was reaching its final stages.

If one didn’t exit now, they would either suffer enormous losses or have their capital locked in the Chinese market for years.

As with any investment, more important than the investment itself was realizing the profits.

Greed at the wrong moment could mean losing the chance to secure gains.

“Chairman, breaking news!”

The Chief of Planning hurried into the chairman’s office.

He pressed the remote, switching the television to a news flash.

[Hyunjin Shipping Bondholders Reach Voluntary Agreement – Hyunjin Group in Crisis]

It was breaking news about Hyunjin Shipping.

Hyunjin Group, which had painstakingly regained control of Hyunjin Shipping, was unable to overcome its losses and was ultimately giving up the company.

“They’ve held out for a long time. But then, it’s Hyunjin Group—they can endure this much.”

“I agree. They’ve been holding on only because Hyunjin Shipping is considered part of the Hyunjin Group. If it were another group, they would have sold Hyunjin Shipping or applied for court receivership long ago.”

At one point, Hyunjin Shipping had generated 10 trillion won in revenue.

Now, however, it had become a failing company, burdened with nearly 5 trillion won in debt.

“Since they’ve entered a voluntary agreement with the creditors, it will still take several months before court receivership could occur.”

“If they fail to repay 1.3 trillion won by the end of this year, they’ll enter court receivership. Hence, the creditors are demanding a restructuring plan from Chairman Jo of Hyunjin Group worth at least 800 billion won.”

The creditors of Hyunjin Shipping were, naturally, banks.

From their perspective, minimizing losses was the priority.

Only with the support of Hyunjin Group—and possibly the government—could they reduce the damage.

“How much can Hyunjin Shipping realistically prepare?”

“We’ve obtained information that it can raise up to 500 billion won.”

“That leaves a gap of 300 billion won.”

“The voluntary agreement will continue for several months, but the likelihood of finding a compromise seems very low.”

How could they cover the 300 billion won gap?

If the gap wasn’t bridged, court receivership would be the only option left.

“If Hyunjin Shipping is facing this level of management crisis, I assume Hyundai Group’s shipping company is in a similar situation.”

“Yes, Hyundai Shipping will also soon enter a voluntary agreement with its creditors.

Unlike Hyunjin Shipping, however, Hyundai Shipping is actively accepting the creditors’ demands.”

“What are their demands?”

“Negotiations on charter fees with foreign shipowners, equity sales, and joining an international shipping alliance. Particularly, Hyundai Group sold Hyundai Securities to inject 1.2 trillion won into Hyundai Shipping, demonstrating sincerity to the creditors.”

Each demand was very challenging.

Yet none were impossible, and if management exerted effort, they were achievable.

“Hyunjin Shipping must be facing similar demands from its creditors.”

“Yes, I understand they’ve received almost identical demands. However, it seems Hyunjin Shipping believes that with its own restructuring plan alone, it can overcome the current crisis.”

“So if they provide 500 billion won through self-restructuring, they expect the government or creditors to cover the remaining funds?”

“It seems they’re hoping for an outcome where ‘big entities never fail.’”

Hyunjin Shipping was the centerpiece of South Korea’s shipping industry.

Hyunjin Group believed that the government would not simply allow such a key company to fail.

“After the IMF, you seem unaware that the ‘too big to fail’ principle in Korea no longer holds.”

“Compared to Hyundai Shipping, Hyunjin Shipping has fewer assets.”

“There’s an even more serious problem. The current government doesn’t particularly favor Hyunjin Group.”

Chairman Jo of Hyunjin Group was currently serving as the head of the Olympic bid committee.

Naturally, this led to numerous overt and covert conflicts with the Olympic foundation.

Whether true or not, there were rumors even before the reincarnation that Hyunjin Shipping’s bankruptcy was linked to these conflicts.

“I’ve heard similar information. From the beginning of this administration, the rumor was that Chairman Jo and the Blue House didn’t get along well.”

“Rumors aren’t exactly reliable. But what’s certain is that the moment Hyunjin Shipping enters court receivership, the likelihood of bankruptcy proceedings increases.”

“If bankruptcy occurs, assets will be sold off. It would be wise to acquire only the prime assets at that point.”

Vice Chairman’s opinion wasn’t entirely wrong.

If the goal was simply to own a shipping company to transport Taewoo Group’s cargo, it was a reasonable approach.

“I want the entire infrastructure of Hyunjin Shipping. Not just cherry-pick a few prime assets, but acquire it in its entirety. And if possible, I want to bring Hyundai Shipping into the Taewoo Group as well.”

“You mean you intend to acquire both Hyunjin Shipping and Hyundai Shipping?”

South Korea’s shipping industry was essentially divided between Hyunjin Shipping and Hyundai Shipping.

If both companies could be brought under Taewoo Group, it would allow Taewoo to monopolize the entire Korean shipping industry.

“Is this plan too ambitious?”

“Honestly, it’s not that excessive. Hyundai Shipping could be acquired for around 5 trillion won, and Hyunjin Shipping could likely be acquired for even less. Even at the highest estimate, acquiring both companies would cost no more than 10 trillion won.”

For Vice Chairman Han, 10 trillion won was no longer a huge sum.

Compared to the profits earned from the Chinese short-selling operation, 10 trillion won was relatively modest.

“The acquisition cost isn’t a burden for me either. I just don’t want to hand money over to the wrong people.”

“I agree. We don’t want to distribute the money we’ve painstakingly earned as if it were charity.
I’d prefer to acquire it at the lowest possible price. If possible, receiving government support would be even better.”

No matter how wealthy someone is, would they want to overpay for something?

At least I didn’t. I wanted to monopolize the Korean shipping industry at the lowest possible cost.

“Are you planning a big deal? But this government is opposed to big deals.”

“Since that’s the Blue House’s stance, the Financial Services Commission chairman has expressed similar views.”

“Last year, there were rumors about a big deal involving the three major shipbuilders, but the government strongly denied them. And the merger of Hyunjin Shipping and Hyundai Shipping was also officially denied by the government.”

During the IMF era, big deals were very common.

Because they were government-led, it was possible to break up a large corporation’s subsidiaries and attach them to other corporate groups.

But corporate-led big deals required consideration of too many factors.

In particular, without government support, it necessitated using an enormous amount of capital.

“The government’s stance ultimately changes according to the will of the people.”

“Do you think a big deal could be possible depending on the general election results?”

“If the National Economic Party adopts a big deal as a campaign pledge and achieves a landslide victory, wouldn’t the government accept it?”

“I’m curious, Chairman, what do you consider a landslide victory?”

“At a minimum, securing a majority of seats is required to call it a landslide.”

Vice Chairman Han let out a small sigh.

For the National Economic Party, which had a short history, securing a majority of seats was almost impossible, hence the sigh.

“According to the New Year opinion polls, the National Economic Party could rise to become the largest party, but its support is still insufficient to secure a majority of seats.”

“If they achieve a landslide victory in the Nakdong River Belt as well, it would be entirely possible.”

The Nakdong River Belt was a political term.

It referred to a cluster of constituencies in the Gyeongsang Province, a stronghold of the ruling party, where the opposition had a realistic chance of contesting.

“Choi Jae-seok’s constituency used to be Gijang County, part of the Nakdong River Belt.”

“His support in the constituency remains strong.”

“However, it’s limited to a few areas. It’s not enough to dominate the entire Nakdong River Belt.”

Choi Jae-seok’s current constituency was now Nowon District in Seoul.

But since he began his political career in Gijang, he maintained strong support there.

Thanks to this, the National Economic Party could potentially secure a few seats in the Busan region.

“If they follow up with pledges to increase support in the Busan Port area after the Nakdong River Belt, securing a majority of seats isn’t impossible.”

“You’re proposing a plan to raise support in Honam through Jeonbuk and in Yeongnam through Busan?”

If support rose in Honam and Yeongnam, support in the Seoul metropolitan area would naturally increase as well.

Over half of Seoul’s residents were originally from Yeongnam or Honam.

If support in their hometowns strengthened, those who moved to Seoul would likely follow suit.

“If Taewoo Group acquires Hyunjin Shipping and Hyunjae Shipping, wouldn’t it naturally have to further develop Busan Port?”

“The construction of the Busan New Port is already underway. It will be completed in 2020, and by 2024, fully automated berths will be finished.”

“You mean expanding Busan New Port beyond its current size. And more importantly, what if the surrounding infrastructure is expanded to more than double its current capacity? Wouldn’t that sway voters?”

The Busan New Port was located in a position that could influence support all the way to Changwon.

If Taewoo Group invested heavily in the surrounding infrastructure, it could win enthusiastic support from local residents.

“Won’t it be criticized as overinvestment when the shipping industry is in crisis?”

“If the development is funded by taxes, perhaps. But if it’s funded with Taewoo Group’s money, what’s the problem?”

“Busan New Port is already being used as a hub port, but wouldn’t further expansion be wasteful?”

Even if the port was large, many ships had to come to the port, and a significant volume of cargo needed to move through it for it to operate properly.

South Korea’s cargo volume was among the highest in the world.

However, its ranking had been slipping every year, and at the current pace, some forecasts predicted it could fall as low as seventh place.

With cargo volume declining like this, making massive investments in the new port could appear wasteful.

“The shortfall in cargo volume will be filled by Taewoo Group. And once overseas factories start shipping to Korea, the volume will naturally increase.”

“If we assume Taewoo Group continues to grow like it is now, Chairman, you’re right.”

“What, you don’t have confidence? Do you think Taewoo Group is going to stagnate?”

“Absolutely not!”

Taewoo Group was like a volcano about to erupt.

If electric vehicle sales increased further and semiconductor sales surged, the current port alone would soon be insufficient.

“I think it’s essential—from shipping to the port—to fully support Taewoo Group’s growth. It’s not just for generating profit, but as a tool to safely supply Taewoo Group’s products to the global market.”

“I’ll work with the planning office to draft related policies and pledges and deliver them to the National Economic Party!”

This wasn’t simply for the National Economic Party.

Even if I wanted the party to succeed, I wouldn’t wish for it to the extent of investing in shipping companies and ports.

The party’s election was just a side benefit.

To ensure Taewoo Group’s growth engine remained unbroken, investing in shipping companies and a major port was essential.