Chapter 2385: Financing (Part 20)

But looking left and right, it didn't seem quite right. Combining with several other documents, he speculated that the Senate's intent should be to establish a subsidiary under the Nanyang Company and publicly offer stocks in the subsidiary's name. This way, native shareholding wouldn't affect the parent company, and it would be convenient to play various tricks in the subsidiary's name. Later, they could continue establishing subsidiaries like South Asia Company, Eastern Roman Company, and so on. But this document was written too vaguely. Was 51%+5%+15% for the Nanyang Company's shares or for Southeast Asia Development's shares? Was Southeast Asia Development, as a Nanyang Company subsidiary, publicly offering with its 39% shares? Or was Southeast Asia Development holding 39% of the Nanyang Company subsidiary's shares? Chu He tried to draw equity structure diagrams and drew three or four plans, feeling any of them could be what the Senate wanted.

He felt this "guiding opinion" probably came from some big shot not from the finance sector. Never mind the inexplicable calculation error—even the vague wording fully demonstrated he was an outsider.

"Even in the 17th century, it's still laymen leading experts," he complained in his heart. His brain had become a mess. He stood up and walked to the window. It was already dark. Under the night sky, the Pearl River sparkled with fishing lamps. From time to time, a distant steamboat whistle sounded. Workers on the night shift at the dock squatted under street lamps smoking, occasionally bursting into laughter. Chu He took a deep breath of the crisp early winter riverside air, then sat back at the desk, thinking: forget it, I won't guess which plan the Senate intends. I'll hand what I think is a reasonable plan to Zhou Wei and let him worry about it. Whichever plan he wants to settle on is fine. Anyway, the Nanyang Company valuation is set—2 million shares total, 1 yuan per share. My plan issues 80,000 shares total, just 4%. Paying out this few shares and the Nanyang Company can start up. No matter how the equity structure changes, it won't affect much.

Thinking this, he suddenly saw the light and began drafting the equity structure.

The next day, the relevant meeting continued at the municipal government.

This meeting was actually a fundraising meeting. Few attended. Besides Liu Xiang, most were Senators from finance and financial departments.

The new plan actually wasn't much different from Chu He's old plan. However, following Liu Xiang's "spirit" from yesterday, verbal modifications were made, deleting all the "technical means" intended for "reneging on debts"—not only that, but also specifically adding related return expectations.

"...Preliminarily prepare to issue a very small batch of bonds, initially set at 20,000 silver yuan. Interest rate, temporarily set at 10% annual return—of course, specifics can still be discussed with Delong..." Zhou Wei spoke excitedly.

"Term is three years, interest paid once at the end of each year. Interest certainly isn't high, but with these people's awareness, they definitely won't not buy. After all, it's not much—each person won't even get a few thousand. The key is to paint a big picture, saying the Senate is about to issue Nanyang Company stock. The company's prospects are great, dividends are high, stock price rises, greatly profitable in the future. They can use bonds to purchase quota to buy Nanyang Company stock at a 2:1 ratio. These people understand the Senate's strength and policies, and are likely to personally participate in Nanyang Company development activities. They boarded the Senate's ship early on and made good money from the Senate. The Senate privately invites them to subscribe—they can't possibly not accept..." Zhou Wei continued introducing. Liu Xiang's brows furrowed as he listened.

"This way we have 10,000 yuan in stocks and 20,000 yuan in bonds. Then announce in the Lingao Times that Nanyang shares rose 20% within a week. Previous shareholders can freely trade, or sell to the Senate. Then use the Senate's controlled media power to amplify this matter. Use various channels to convey this to other non-core gentry and big households. The more people know, the better. Use the wealth effect to attract them to participate in the second bond issue. This round can still be targeted, still given to major chambers of commerce, clan big households, etc., but this bond issue's interest and stock allotment ratio changed—8% interest, four-year term, stock allotment ratio 5:2, total 50,000 yuan. This way, we complete 100,000 in allotment in two rounds..."

"...Finally, we repeat this process. In the third week, allot the last 100,000 in bond-stock quota at 3:1 and 8% interest, thus completing the task of raising 200,000 in 30 days." Zhou Wei finished his "as accessible as possible" explanation of "financial operations" triumphantly, but noticed Liu Xiang's expression wasn't great.

Is this... not enough benefit delivered? Zhou Wei quickly brought out the prepared "benefit transfer plan." "Once the initial financing enters the operational stage, we can start another round of financing. This time, I think we can bundle sales of 'Guangzhou Municipal Urban Construction Fund' type public debt. Everyone can share issuance costs, ahahahaha..."

Liu Xiang hurriedly raised his hand to stop Zhou Wei's attempt at cuteness.

"Little Zhou, let me ask a few questions first!"

"Grand Prefect Liu, go ahead." Zhou Wei blurted out the "Grand Prefect Liu" usually used for teasing, completely unaware.

Liu Xiang didn't mind this and directly asked the core question. "The preliminary issuance... 20,000 bonds, right?" He specifically looked at his notes, then saw Zhou Wei nod before continuing. "Then, what about collateral?"

"Only 20,000, what collateral is needed..." Zhou Wei thought this, but also had confidence—although the Southeast Asia Company's assets in his hands hadn't been sorted out yet, a mere 20,000 silver yuan wasn't worth his attention. At the same time, he really didn't think that in such a large Guangzhou Prefecture, a mere 20,000 needed collateral. His inner theater silently ran the famous scene of "Want an imperial edict? Someone, this house will write him one!" while he tested the waters. "This is just the first phase of 20,000, surely no collateral is needed..."

"Indeed, a mere 20,000 really doesn't need collateral. I'll gather the 'progressive people' for a cocktail party, introduce you, and the 20,000 task is easily done." Liu Xiang suddenly changed the subject. "Little Zhou, these days you've been inspecting everywhere, Danzhou one moment, Foshan the next. Inside and outside Guangzhou city, you seem to have only inspected for three or four days!"

Zhou Wei felt slightly embarrassed upon hearing this, just about to respond when Liu Xiang's second question arrived. "Director Zheng's side—you don't seem to have chatted with her yet?"

Hadn't had time... But he couldn't answer like that.

"Director Zheng is a busy person, my timing wasn't right either..."

Liu Xiang raised his hand again, cutting off Zhou Wei's words. "That's too bad. I don't know what insights you've gained from your recent research. When Director Zheng and the others first came to Guangzhou to take over from Guo Yi, I remember we had Little Zhang take the lead in writing an article submitted to the Morning Star. The title was something like 'A Brief Study on the Behavioral Logic of Contemporary Guangzhou Merchants.' You probably haven't read it either?"

Hey, Zhang Yunmi as first author, followed by a string of Guangzhou resident Senators, with you as corresponding author. Who wouldn't think this was just you using it to favor someone? Who would actually read it carefully! Is there actually content in it?

"Aiya, I might have really missed it. Let me borrow it from our municipal government library later? Give it a good read?" Zhou Wei immediately became careful.

"That's not necessary. It mainly talks about how, for natives in this spacetime, in this era, 'the government' actually has no damn credibility in their hearts. You could even say the Ming government's credit is directly negative infinity. We came into Guangzhou city and did so many things, including this plague fighting, before we established that tiny bit of credit."

"But we..." Liu Xiang pointed at Zhou Wei, then at himself. "...can't take this tiny bit of credit too seriously. Merchants of this era, mostly, the credit unit they recognize is still individuals."

"Now, tell me, if I host this cocktail party, this 20,000 silver yuan—who are they lending to, and who is lending to you?" This sentence, Liu Xiang said slower and slower, his tone heavier and heavier.

Hearing this, Zhou Wei had no choice but to clasp his hands in a salute, saying, "It's you, big brother!" Thinking in his heart: is Liu Xiang asking for personal benefits? Then giving him a few points in the share allotment is fine...

"So, am I, Liu, worth only this 20,000 yuan?" Liu Xiang continued. "Back when that He Rubin asked Guangzhou's wealthy merchants to 'assist with military provisions,' he opened with 300,000 taels, empty promises yet still got it done. Have I, Liu, and a bunch of partners, worked diligently in Guangzhou for years, survived great disasters, only to be worth less than an airborne military commander?"

Huh? Does he feel I'm looking down on him? Your defensive range is a bit strange... Also, what exactly do you mean by saying this? Are you going to use your personal credit to help me round up 200,000? But also true—inviting Old Liu to come forward, only making a fuss about twenty or thirty thousand, really isn't done quite decently...

"Then let me ask you, what do you think of my position as Guangzhou Mayor?" Liu Xiang didn't care about Zhou Wei's answer and continued asking pressingly.

Zhou Wei momentarily couldn't figure out what Liu Xiang wanted to express and could only vaguely respond. "Uh... good..."

"Good, it is good. Once you sit in it, just casually copy some ideas from the old spacetime and you can grind out achievements, right?"

"Right."

"Then as you can imagine, based on my serving a full term of 5 years, at least another four terms after that will all be our Senators sitting in this position, right?"

"Right."

"After that, there's a high probability it'll be the outstanding ones among our children, coming to sit in this position, right?"

My kids probably won't catch this round... Zhou Wei complained in his heart, but could only respond. "Right."

"Then should I or should I not set this precedent, using personal credit and identity for unsecured financing for investment projects?" Liu Xiang continued. "For example, suppose next year I request to be Governor of Jiaozhou and recommend your wife to succeed as Guangzhou Mayor, and your Nanyang Company, due to overexpansion, can't honor the first year's repayment. Do you think your wife is sitting in a position easy to grind achievements, or entered a rotten vegetable garden?"

(End of Chapter)