New Employees With an Annual Salary of 1 Trillion Won - Chapter 118

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This chapter was translated by Lunox Team. To support us and help keep this series going, visit our website: LunoxScans.com
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Chapter 118. Black Gold and White Gold (2)

 

As expected, the storm began to rage.

 

As if waiting for Chairman Wang’s funeral to end, Daehyeon Electronics’ creditor group made their move.

 

“Branch Manager, Daehyeon Electronics’ creditor group has called an emergency meeting.”

 

“The situation must be that serious.”

 

“Yes. With the semiconductor price crash combined with excessive facility investments, their debt has snowballed. The current debt scale alone exceeds 10 trillion won. We invested 2 trillion won, but the debt ratio hasn’t improved at all.”

 

Daehyeon Electronics had been too greedy.

 

Not content with swallowing GL Semiconductor, they had also entered the LCD business.

 

But due to the IT bubble, semiconductor prices plummeted and cash flow deteriorated rapidly.

 

“What’s the scale of short-term debt repayment for the first half?”

 

“The scale we’ve identified so far exceeds 3 trillion won.”

 

“Who is the core of the creditor group?”

 

“Industrial Bank. Industrial Bank’s loan scale alone reaches 3.5 trillion won. Other commercial banks have provided loans ranging from hundreds of billions to about 1 trillion won.”

 

Industrial Bank was at the center of the creditor group.

 

We were next. With our investment reaching 2 trillion won, we could secure more voice than the commercial banks.

 

“Let’s review the Daehyeon Group materials once more before the creditor meeting.”

 

“I’ll prepare everything down to the smallest detail.”

 

We had already reviewed Daehyeon Group materials over hundreds of times.

 

And we had identified which subsidiaries or departments were broken gears and which were functioning parts.

 

But there might be something we missed, so we decided to review the materials one last time before the creditor consultation.

 

***

 

Chairman Jang Dong-hyeon of Daehyeon Electronics and representatives from commercial banks gathered for an emergency meeting.

 

I attended as both a member of the creditor group and a major shareholder of Daehyeon Electronics, and due to the large scale of our investment, I was assigned a seat at the head table.

 

Once everyone was seated, the conference room atmosphere grew heavy.

 

The Vice President of Industrial Bank proceeded with the meeting in a cold voice.

 

“We’ll begin the emergency meeting hosted by Industrial Bank. First, I’d like to ask Chairman Jang Dong-hyeon of Daehyeon Electronics. Do you have a debt repayment plan? If so, please explain it specifically.”

 

Chairman Jang Dong-hyeon sighed first.

 

What he could say was limited.

 

“I hope you’ll trust us and wait. Once the semiconductor cycle recovers, we can quickly restore sales. And right now, debt has only increased due to aggressive facility investment.”

 

“Is there no other plan besides waiting?”

 

“Of course there is. As you’ll see from the materials we’ve prepared, we’re planning to sell non-core assets. We’ll raise some funds by selling unused real estate and facilities.”

 

It was a solution that wouldn’t even make a dent.

 

The real estate Daehyeon Electronics owned couldn’t solve debt exceeding 10 trillion won.

 

“Do you have other plans?”

 

“We’re also planning to raise product prices. And for inventory, we plan to secure cash through price discounts. Finally, we’ll strengthen capital through overseas joint ventures.”

 

“All of these are unrealistic solutions. If product prices are raised, sales volume will actually decrease. And selling inventory at a discount won’t increase sales. Finally, attracting overseas joint investment takes at least several years.”

 

The Vice President of Industrial Bank was a cold person.

 

He analyzed all plans realistically like a machine and informed all creditors that they were merely stalling tactics.

 

“In this state, you cannot maintain management rights of Daehyeon Electronics. To repay debts, literally bone-cutting innovative measures are needed.”

 

“By innovative measures, do you mean restructuring?”

 

“That’s right. Through restructuring and large-scale asset sales, the debt ratio must be lowered.”

 

The creditor group seemed to have no intention of waiting.

 

They wanted to recover at least some funds immediately through restructuring and large-scale asset sales.

 

And crucially, they seemed to have no faith in Daehyeon Group.

 

“We’ll accept the restructuring plan.”

 

“Finally, if you want new funding support and debt restructuring, you must transition to a professional management system designated by the creditor group.”

 

Management rights seizure.

 

The creditor group was presenting conditions tantamount to a death sentence.

 

This was proof that Daehyeon Electronics’ management situation was that serious, and they had concluded that recovery was impossible with the current approach.

 

“We cannot give up management rights. We’ll fulfill all conditions the creditor group presents. Aggressive restructuring and large-scale asset sales – I’ll implement everything with my own hands.”

 

“We’ve made the same proposal countless times, but there have been no substantial measures. We can’t wait any longer with our hands tied.”

 

The creditor group held the knife handle.

 

They were pressing by pointing that blade at Chairman Jang Dong-hyeon’s throat.

 

In a situation too difficult to endure alone, I opened my mouth for the first time.

 

“May I say something? I’m Lee Jung-hoo, Branch Manager of Tiger Fund Korea Branch.”

 

“Of course that’s fine. Please speak freely on any matter.”

 

“Tiger Fund has already invested a huge amount of 2 trillion won in Daehyeon Electronics. However, as those funds were used for aggressive facility expansion and factory construction, borrowing actually increased and the debt burden grew. So instead of fund recovery, we want to immediately reduce debt through asset acquisition.”

 

This meant we would give up both equity shares and bonds.

 

Instead, it was a proposal to take on some facilities and lines from Daehyeon Electronics that were difficult to convert to cash immediately.

 

Debt reduction and taking on burdensome assets.

 

Since these were conditions the creditor group had no reason to refuse, a positive reaction emerged.

 

“What assets do you wish to acquire?”

 

“We want to acquire the semiconductor business division that carries Daehyeon Electronics’ largest debt.”

 

“Is this a method of acquiring the debt as well?”

 

This was where it got important.

 

About 70% of Daehyeon Electronics’ debt belonged to the semiconductor business division.

 

We had to somehow reduce the proportion of debt acquisition.

 

“Before discussing the acquisition method, I think we need to first address the reality of Daehyeon Electronics’ semiconductor business division. Memory prices have plummeted to less than one-third, and annual losses of trillions of won are occurring. And compared to 1999, market capitalization has shrunk to one-fifth the level.”

 

“That may be true, but Daehyeon Electronics acquired GL Semiconductor for over 2.5 trillion won. Including Daehyeon Electronics’ existing semiconductor business division, the value is certainly not low.”

 

The current value of Daehyeon Electronics’ semiconductor business division was roughly 2 trillion won.

 

But the moment debt was added, it became minus 5 trillion won or more, so the creditor group’s argument was meaningless.

 

“If we have to take on all the debt, which company would acquire Daehyeon Electronics?”

 

“Please state your desired conditions first.”

 

“We want to acquire the semiconductor business division on condition of forgoing recovery of our 2 trillion won investment and taking on half the debt.”

 

“Half the semiconductor business division’s debt amounts to 3.5 trillion won. Are you saying Tiger Fund will bear this amount?”

 

It was an enormous amount.

 

We had already invested 2 trillion won, and would be taking on 3.5 trillion won in debt on top of that.

 

It amounted to acquiring the semiconductor business division for a total of 5.5 trillion won.

 

“Actually, this condition is structured so that Tiger Fund loses too much. It amounts to acquiring Daehyeon Electronics’ semiconductor business division for a total of 5.5 trillion won.”

 

“Do you have other conditions?”

 

“We would like to also acquire Daehyeon Electronics’ small device production lines and factories.”

 

Daehyeon Electronics’ main products were white goods.

 

Relatively, the small device production factories that manufactured MP3 players, radios, or CD players were small in scale and not very valuable.

 

“Is there a reason you want the small device production lines and factories?”

 

“They’re small in scale and have no immediate profitability. But if Tiger Fund makes an effort, maintaining employment is possible. This way, won’t the government also allow Tiger Fund to acquire the semiconductor business division?”

 

“So you want the small device lines for building justification.”

 

The positions of the creditor group and government had to be different.

 

The creditor group wanted restructuring to raise corporate value even slightly.

 

But the government had to want employment maintenance considering public opinion.

 

Since we said we’d acquire small lines and maintain employment, the creditor group also received it positively.

 

“While maintaining employment would be difficult for large-scale lines no matter how hard Tiger Fund tries, for small lines, the scale is small enough that it’s fully possible if we accept some losses.”

 

“Are there any opposing opinions? If not, we’d like to hear Daehyeon Electronics’ position.”

 

No creditors raised opposing opinions.

 

It was a condition where 2 trillion won in investment would be deleted and 3.5 trillion won in debt would disappear at once.

 

But Daehyeon Electronics’ position was different. They had to give up the semiconductor business division, which was Daehyeon Electronics’ core.

 

“For the sake of Korea’s semiconductor industry, a domestic company must maintain the semiconductor business!”

 

“Then I’ll propose one more condition. If we add a condition that Tiger Fund will negotiate with domestic companies first if we resell the semiconductor business division, wouldn’t that solve the problem you’re concerned about, Chairman?”

 

We had no intention of reselling the semiconductor business division.

 

It would be Tiger Fund’s reliable cash cow going forward.

 

So adding a few more clauses about resale wouldn’t be a problem at all.

 

“We need a clause stating that Daehyeon Group has the highest priority negotiation rights.”

 

“If the creditor group agrees, we’ll add that clause as well.”

 

“We all agree. However, this isn’t something we can decide here. Ultimately, we need government approval.”

 

“If the creditor group and Daehyeon Electronics provide written consent, Tiger Fund will step forward to negotiate with the government.”

 

The Vice President of Korea Development Bank provided written consent without any hesitation.

 

There couldn’t be better conditions than this.

 

And Chairman Jang Dong-hyeon also seemed to think this was the only way to reclaim the semiconductor business, reluctantly providing written consent.

 

“I will definitely come back to reclaim it someday. Please take good care of it until then.”

 

“We’ll be waiting.”

 

Chairman Jang Dong-hyeon handed over the consent form with a wistful expression.

 

He strongly conveyed the feeling that he was temporarily entrusting Daehyeon Electronics to us.

 

No matter how long he waited, such a day would never come.

 

Chairman Jang Dong-hyeon’s Daehyeon Group was already a sandcastle that had begun to crumble.

 

Daehyeon Electronics was just the beginning.

 

Daehyeon Construction, one of the two massive axles that formed Daehyeon Group, was also shaking.

 

Since I would meet with him again regarding the Daehyeon Construction issue, I shook his hand with the utmost courtesy.

 

***

 

Now it was time to target the government.

 

Having already obtained written consent from Daehyeon Electronics and the creditor group, Daehyeon Electronics’ Semiconductor Business Division would become Tiger Fund’s property once government approval was granted.

 

But I didn’t need to make the first move.

 

The Chief Secretary had already contacted me first, apparently having heard the news.

 

“It’s been a while since we met. We met during the Midopa Department Store acquisition, right?”

 

“Thanks to the Blue House, Midopa Department Store was able to come back to life. We’re truly grateful.”

 

“Actually, my wife kept saying she wanted to visit Midopa Department Store, so we went there recently. It was like a completely different world. Truly impressive.”

 

During the Midopa Department Store acquisition, I had also obtained acquisition approval through the Chief Secretary.

 

Of course, it was an acquisition approval I could obtain because I had provided the government with tremendous compensation called Sunshine Loan.

 

And this time too, he would certainly demand something equivalent in return, so I had prepared thoroughly in advance.

 

“Tiger Fund continues to strive for the revival of Korean companies through foreign currency attraction.”

 

“Is that why you’re trying to acquire the semiconductor business? But unlike other sectors, semiconductors are somewhat sensitive.”

 

The Chief Secretary was already starting to lay the groundwork.

 

I had a premonition that this would be more difficult than any negotiation I had conducted so far.

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This chapter was translated by Lunox Team. To support us and help keep this series going, visit our website: LunoxScans.com
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