Chapter 2384: Financing (Part 19)

At this point, he felt he couldn't not say a few words, lest these two former financial migrant workers go down the evil path of harvesting for harvesting's sake.

Liu Xiang covered his mouth with his hand, gave a slightly authoritative cough, and interrupted Chu He's "roadshow."

"Let me interrupt for a moment," Liu Xiang said. "Forgive my frankness, I really can't listen anymore."

These words made both Zhou and Chu freeze. Liu Xiang rarely rejected others' statements so bluntly. Most of the time, his manner had a joking quality of quips and teasing.

Chu He thought his techniques would make a mess of Guangzhou and Liu Xiang had objections. He hurriedly said, "I was just giving some examples earlier, illustrating that the Senate can reasonably use rules to lower bond financing costs. The specific implementation still needs to be decided based on the target and actual situation—in short, it absolutely won't leave after-effects for the fundraising location. A gambler accepts their losses. Make them lose willingly and convincedly..."

"Old brother, verbally convinced is certain, but convinced from the heart may not be. These techniques of yours, needless to say, are very advanced. But how many natives can figure these things out? In the end, doing this, we're still relying on the Senate's credit to raise funds, and relying on the Senate's bayonets to renege on debts. What's the point? It would be more straightforward to directly have wealthy households do 'joyful contributions and joyful donations'—at least there would be fewer after-effects."

Chu He immediately explained. "What I described before are essentially means of the Senate competing with the people for profit. Simply using such methods alone won't help the Nanyang Company's long-term financing, won't help the healthy development of the financial market, and certainly isn't the original intention of the Senate leadership. I think a more reasonable approach is to combine stocks and bonds. Let the Senate earn the vast majority of profits, with a small number of core forces attached to the Senate earning along. Use the wealth effect to attract larger amounts of private capital, and use rules and power to ensure these private capitals can only earn small profits in the end."

Zhou Wei secretly nodded: this thinking was similar to his. He also didn't want to see himself working hard in Southeast Asia while a bunch of native big households made pots and basins full in the stock market. But seeing Liu Xiang's expression getting worse and worse, he said nothing, not even nodding.

Liu Xiang saw Chu He still seemed somewhat confused and felt he should explain more clearly.

"Although I don't understand finance, I at least know some of the tricks inside. For this plane, at least in Great Ming, using bonds and stocks as means to gather wealth and harvest leeks is purely winking at the blind. Natives won't understand so-called procedural legality. Anyway, the Senate has guns, and whether it's legal or not is up to the Senate itself. We ourselves are both athletes and referees. Fine, the procedure is absolutely legal, but this is what we ourselves think is legal. Natives don't see it that way. In their view, you simply have no credibility. The official's mouth is open—whatever they say makes sense. Doing this, what difference is there between the Senate and the Ming state? If we really want to harvest leeks, we have plenty of means: coinage, banks, insurance... any financial means is simpler to operate than bonds and stocks, and looks better. There are plenty of means to extract wealth from the people. Why start thinking about reneging before even selling the bonds?"

"No, no, Mayor Liu, you've misunderstood. I was just giving examples, just saying we have plenty of means and don't need to worry about financing costs. After all, the Senate's credit is most important..." Chu He thought his "letting himself go" was going to cause trouble!

But Zhou Wei was laughing inside: Look at you showing off! See if you go complaining about me again! But it was also good. Chu He had essentially tested the waters for him. This way, he'd figured out the true thoughts of the Senators in Guangzhou. He now had a clearer idea of how far the upcoming fundraising plan should go.

Liu Xiang continued. "Actually, for natives in this spacetime, stocks and bonds are pretty much the same. Only the progressive-minded ones will buy. The real landlords who only know how to buy land and collect rent don't care about these things. The result is the Senate harvesting hard from these progressive-minded people who believe in the Senate..." Saying this, he spread his hands, indicating incomprehension.

At this point, Zhou Wei came out to smooth things over. "Mayor Liu! What Chu He discussed is after all just a draft. The specific implementation will definitely require extensive solicitation of opinions. Your opinion is excellent, this, this, like enlightenment..."

Liu Xiang thought: now it's become "Chu He's draft" and not "the Nanyang Company's fundraising draft"? You change pretty quickly!

"I don't have enlightenment, but I have a bucket of cold water. I think you should think more carefully. We are now rulers—since we are rulers, we can't just think about profits like capitalists. We need to look after our base. Make them satisfied and profitable."

Zhou Wei took the opportunity to step down. "Since that's the case, let's first withdraw the proposal, revise it, and then bring it to the meeting for discussion."

The two left the conference room. After being criticized by Liu Xiang, their relationship seemed to have grown much closer. Chu He smiled bitterly. "This draft got criticized badly! I said things I shouldn't have!"

"Not at all. What you said were just technical means. Just keep them in reserve without using them." Zhou Wei said, "Let's still discuss tonight how to revise the proposal. The specific financing plan also didn't get fully explained just now. There's still time. Tell me about the general idea."

"The plan is like this. I'm planning to raise 300,000 within one month, including both bonds and stocks..."

When Chu He returned to the guesthouse, he let out a breath. Although today's roadshow wasn't very successful, at least he understood Zhou Wei's and Liu Xiang's thinking. In the evening conversation with Zhou Wei, the other party had expressed great interest in his financing proposal. Since that was the case, whatever the final proposal turned out to be, it would very likely be based on his proposal. Although his intention wasn't in the Nanyang Company, with this "achievement" in hand, it would be excellent help for his future "advancement."

Now, although there would inevitably be some grudges in his heart, at least he had formed a preliminary cooperative relationship with the Nanyang Company—this was much better than parting on bad terms and being at loggerheads.

When leaving Zhou Wei's place, Zhou Wei had also given him a document, asking him to "design" the "Nanyang Company equity structure."

Frankly speaking, this wasn't at all difficult for a financial migrant worker, and with Zhou Wei's qualifications, it was even easier. His seriously handing it over naturally had the meaning of "showing goodwill." And Chu He naturally had to properly demonstrate his capability.

However, when Chu He finished dinner and opened the document bag Zhou Wei gave him, he realized this wasn't so easy.

After reading these materials, he was somewhat confused. No wonder Zhou Wei had been studying the equity structure for so long. The Senate's instructions were too vague, making it hard to understand their intent.

For example, the key instruction in the Senate document: "All property owned by the original Southeast Asia Company shall be entirely contributed to the new company. According to equity distribution: state-owned shares 51%, Senate 5%, individual Senator holdings 15%, the remaining 39% shares will be used for the newly established 'Southeast Asia Development Co., Ltd.,' whose shares will be publicly offered in the name of that company." Not to mention the share total adding up to 110%, other parts of this instruction also puzzled him for a long time.

Had the Senate forgotten that the original Southeast Asia Company had 49% of shares belonging to the absorbed pirate groups? The Southeast Asia Company's assets were transferred, the state-owned shares were moved away—how to handle this 49%? According to the financial report Zhou Wei gave him, this 49% stock capital was nearly 530,000 yuan. Liu Xiang alone had 150,000. If this 530,000 capital was injected into the new Nanyang Company, either Liu Xiang's single share would be about the same as the Senate collective's, or the Nanyang Company's valuation would have to be sky-high.

How to handle this? Chu He scratched his head in contemplation. After thinking it over, he might as well establish a new Southeast Asia Shipping Company, transfer this pirate shareholding to Southeast Asia Shipping, then have the Nanyang Company virtually inject some funds, hold the majority of Southeast Asia Shipping Company shares, and turn it into a Nanyang Company controlled shell subsidiary.

As a Nanyang Company subsidiary, Southeast Asia Shipping's profits would naturally still be up to the Senate. When the time came, just pay dividends to the pirates as before. The pirates would hold Southeast Asia Shipping stock but work at the Nanyang Company. Anyway, these old pirates couldn't understand financial statements and wouldn't dare make a peep. It would also be convenient to use the subsidiary to inflate some related-party transactions in the future. This way, the pirate group's holdings wouldn't be the same thing as Nanyang shares, and they wouldn't get a free ride on this IPO either.

Having solved the pirate group shareholding, the remaining parts were even more puzzling. State-owned shares 51%, Senate 5%? What was the difference between these two? The former was state-owned assets, the latter was the imperial household treasury? The Senate was really good at setting up monuments of virtue.

Also, the document from the General Office said "The first batch of stock sold: 1 yuan per share silver dollar certificates, 100,000 shares total." Did this refer to the 5% sold to individual Senators? With stock face value and proportion all set, what value was there to estimate? Didn't the Senate's meaning clearly indicate the Nanyang Company was valued at 2 million yuan, total capital of 2 million shares, 1 yuan per share? Mm... that would also work, saving him from making up a valuation. If he overestimated and triggered another oil-type incident, other Senators also couldn't blame him.

The last sentence—"the remaining 39% shares will be used for the newly established 'Southeast Asia Development Co., Ltd.,' whose shares will be publicly offered in the name of that company"—was the most confusing. First, was this Southeast Asia Development Company the Nanyang Company's shell for public offering? Or a different company from the Nanyang Company? What was the relationship between these two companies?

Chu He read this passage several times. If Southeast Asia Development was just the Nanyang Company's shell, it would be easy to understand—equivalent to selling 39% of Nanyang Company shares to natives, with Southeast Asia Development being the external name, which could be understood as the stock code.

(End of Chapter)