Chapter 115: Wardley Company
Lin Haoran was no longer an insignificant figure. As the chairman of a listed company in Hong Kong, he was granted a meeting with Max, the Chairman of the Securities Commission, after the staff informed him of his arrival.
Like many senior officials of the Hong Kong colonial government, Chairman Max was British.
At this point in history, the Governor of Hong Kong and almost all senior government officials were appointed by Britain. Chinese officials in high-ranking positions were extremely rare, with nearly all top administrative posts monopolized by the British.
"Mr. Max, hello. I apologize for disturbing you at this hour, but I've received the Securities Commission's official notice regarding the privatization of Qingzhou Yingni. Overall, I support the process.
However, after studying it carefully, I've encountered a rather difficult problem, so I felt I had no choice but to seek your advice personally."
Lin Haoran greeted him politely before the two took their seats.
"My concern mainly lies with the financial arrangements. I understand and, in principle, agree with the Commission's position.
The reality, however, is that in order to obtain control of Qingzhou Yingni, I financed a large portion of the acquisition through bank loans. Nearly half of my shareholding was acquired using borrowed funds.
At present, I've exhausted all my capital purchasing additional shares and am carrying a substantial loan from Hang Seng Bank. Those loans are secured by Qingzhou Yingni shares.
Here are the loan agreements with Hang Seng Bank. If you'd like to verify their authenticity, I'm sure it won't be difficult."
He handed over the documents.
"Under these circumstances, I recognize that complying with the Commission's request to privatize the company is my responsibility.
But faced with my current financial difficulties, I find myself wanting to comply with the regulations while lacking the means to do so.
Therefore, I sincerely hope you can offer some advice or guidance that will allow me to satisfy the Commission's requirements while also resolving my financial predicament."
Lin Haoran spoke earnestly.
Max accepted the loan contracts and examined them carefully.
After confirming that both contracts clearly listed Qingzhou Yingni shares as collateral, he returned the documents without showing much emotion.
To him, the Qingzhou Yingni case was simply another routine matter.
Those British shareholders behind the complaint weren't particularly important in his eyes.
Institutions like HSBC and Jardine Matheson were the kinds of organizations that truly deserved his attention.
Qingzhou Yingni, on the other hand, wasn't high on his list of priorities.
Nevertheless, he maintained a professional attitude.
"Mr. Lin, I fully understand your current situation.
Personally, I'd like to offer you two suggestions for your consideration.
First, you may continue raising funds and proceed with the privatization of Qingzhou Yingni.
During this process, you are free to negotiate with the other shareholders regarding both the acquisition price and the timeline.
Please note that the purchase price proposed in our official letter is merely a recommendation—it is not legally binding.
If you believe the suggested price is unreasonable, you are entirely entitled to negotiate with the shareholders until both parties reach an agreement."
He paused before continuing.
"Second, a simpler option would be to sell part of your holdings and reduce your ownership below fifty percent.
Doing so would remove you from the scope of the mandatory general offer provisions under Hong Kong's Takeovers and Mergers Code.
If you decide to pursue this option, however, I recommend acting as soon as possible to avoid causing unnecessary inconvenience for the Securities Commission."
He smiled politely.
"Mr. Lin, these are merely my personal suggestions. I hope they'll be helpful in making your decision.
Do you have any other questions?
If not, we'll conclude our meeting here.
I have other work that requires my attention.
Should you have any further questions in the future, feel free to contact me during office hours.
Here's my business card."
As he spoke, Max handed over his card.
His tone clearly suggested he wished to end the meeting quickly, perhaps because he genuinely had other urgent matters to attend to.
Perhaps, after seeing the loan contracts and realizing Lin Haoran was short of funds, he understood that there was little opportunity to extract any additional benefit for his fellow British countrymen.
Instead, he simply pointed out the essential facts directly.
Taking the card, Lin Haoran smiled.
"Very well, Mr. Max. Thank you very much for your explanation today. It has been extremely enlightening.
In that case, I won't take up any more of your time.
Goodbye."
With that, he carefully put away the business card and left the Securities Commission building in a noticeably lighter mood.
For Lin Haoran, this brief meeting had been a turning point.
Not only had it answered the questions that had been troubling him, but it had also revealed a new path toward resolving the issue.
It felt as though the clouds had finally parted.
What had previously seemed like an impossible obstacle under the Takeovers and Mergers Code now appeared entirely manageable.
The Code itself did not mandate a fixed acquisition price.
That meant he had every right to reject the Commission's recommended price, provided he could properly negotiate with the remaining shareholders.
His father, Lin Wan'an, had simply been too cautious, worrying excessively about offending the Securities Commission.
Judging from Max's attitude, however, Lin Haoran could tell the Commission wasn't particularly invested in this matter.
Nor did he believe he had offended them.
Although the privatization would now have to be brought forward ahead of schedule, Lin Haoran wasn't overly concerned.
Privatizing Qingzhou Yingni had always been part of his long-term plan.
Whether it happened sooner or later made little difference.
As for the funding...
He already had an idea.
If capital became insufficient, taking out additional loans would likely be the quickest and most effective solution.
Although doing so would increase his financial burden, as long as the privatization succeeded, the temporary pressure would be worthwhile.
Thinking this, Lin Haoran unconsciously quickened his pace, feeling increasingly optimistic about the future.
There was no need to worry about financing just yet.
That stage hadn't arrived.
When the time truly came, he would naturally find a way to raise the money.
The important thing was that he refused to be taken advantage of.
Leaving the Securities Commission building, Lin Haoran drove directly to Qingzhou Yingni.
"Boss, how should we respond to this matter?"
Burton hurried into the office as soon as he heard Lin Haoran had arrived.
"About an hour ago, several newspaper reporters came to the company hoping to interview you."
"Reporters?"
Lin Haoran frowned in surprise.
"How did they learn about this so quickly?"
"I'm not sure."
Burton shook his head.
"We'd only received the Securities Commission's notice about two hours earlier, and they showed up almost immediately.
That's exactly what puzzles me."
Lin Haoran nodded thoughtfully.
"Mr. Burton, how well do you know the other members of the board?"
"Not particularly well.
Previously, those shareholders only came to the company during board meetings.
However, two of them recently approached me separately, asking whether you had any plans for Qingzhou Yingni.
Since you weren't in Hong Kong at the time, I simply told them that you hadn't made any plans yet."
Lin Haoran nodded again.
By now, he was almost certain.
Those reporters had been tipped off by those shareholders.
Their objective was obvious:
To make the matter as public as possible.
Those shareholders clearly no longer wished to retain their stakes in Qingzhou Yingni.
Yet finding buyers was nearly impossible.
Few investors would be interested in purchasing shares of a listed company that was already overwhelmingly controlled by a single shareholder—especially when that controlling shareholder appeared to be an inexperienced young businessman.
If they turned the issue into a public controversy, everyone in Hong Kong would know about it.
That would leave Lin Haoran with little choice but to proceed with the company's privatization.
"Mr. Burton," Lin Haoran asked, "what would you recommend?"
Burton answered immediately.
"Boss, after receiving the Commission's notice, I specifically reviewed the Hong Kong Takeovers Code.
If you do not intend to privatize Qingzhou Yingni, then you should reduce your holdings to 49.99% or below.
You absolutely must not exceed the fifty percent threshold.
Otherwise, privatization becomes unavoidable."
He continued,
"However, if you truly intend to privatize the company, then I believe this incident may actually present an excellent opportunity.
The Hong Kong Takeovers Code does not require you to purchase the remaining shares at the highest market price over the past six months.
That means you are perfectly entitled to reject the Commission's recommendation.
You can simply announce your intention to privatize Qingzhou Yingni."
"From what I understand, the market isn't very optimistic about your control of the company.
Most investors are bearish regarding Qingzhou Yingni's future, which is precisely why the share price previously fell to just over three Hong Kong dollars.
Therefore, I recommend offering a price that is neither too low nor too high.
If the offer is reasonable, ordinary shareholders shouldn't object too strongly, allowing the acquisition to proceed smoothly."
"As for the remaining board members, I suggest convening a board meeting to negotiate the purchase price with them until everyone reaches an acceptable agreement."
Then Burton made another suggestion.
"I also recommend entrusting the privatization process to Wardley Company.
They specialize in corporate acquisitions and privatizations.
Not only do they possess highly experienced professional teams, but they also enjoy exceptionally strong backing.
If you leave this matter to them, you can rest easy."
Burton's advice not only echoed Chairman Max's thinking but also expanded upon it, providing a much more practical strategy.
"Wardley Company?"
Lin Haoran repeated curiously.
Burton nodded.
"Boss, Wardley Company is a wholly owned subsidiary of HSBC, although it operates independently.
The company specializes in securities underwriting, corporate advisory services, corporate management, mergers and acquisitions, financial investment, and medium- to long-term financing.
With the HSBC Group standing behind them, Wardley commands enormous influence within the financial industry.
They handle even the most complicated transactions with remarkable ease.
For example, in the ongoing battle for additional shares of Wharf Holdings, Mr. Pao Yue-kong specifically chose Wardley as his financial adviser because of its professional expertise."
Upon hearing the explanation, realization dawned on Lin Haoran.
"I see now."
He smiled.
"In that case, let's entrust Qingzhou Yingni's privatization entirely to Wardley Company."
"As for the company's official announcement, let's hold off for the moment.
I'd like to observe both the market's reaction and the media coverage first.
Tomorrow's news should be quite lively.
Let's allow everyone to speculate for a while."
He smiled meaningfully.
(End of Chapter)
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