The Return of the Ruined Chaebol's Third-Generation Heir - Chapter 128

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This chapter was translated by Lunox Novels. To support us and help keep this series going, visit our website: LunoxScans.com
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Regression of a Fallen Chaebol Heir — Episode 128
“…….”
The room was silent.
Nakamura Kenji made no response to my proposal.
Hong Sang-jin, seated beside me, remained equally still—he was hearing this proposal for the first time.
He must have been quite taken aback.
“I understand this may seem abrupt, but I’ve given considerable thought to what would be best as I made my way here, and I’m now offering you my conclusion.”
“…….”
Nakamura Kenji still said nothing. Not that I hadn’t anticipated this silence.
The joint venture had been operating smoothly for over seven years.
From Shinei Chemical’s standpoint, they’d been making steady progress in South Korea through the joint venture’s indirect entry.
“……Why?”
Nakamura finally spoke.
“My apologies. It’s such an unexpected proposal that I’m still…… processing it.”
I nodded.
“I understand. But I believe this is the best course for Shinei Chemical right now.”
I continued, meeting his gaze.
“You said you can barely hold out another six months. If we acquire Shinei Chemical’s equity stake in the joint venture, you could solve your immediate liquidity crisis right away.”
Nakamura’s expression remained tense, but he was listening.
“If things deteriorate and you’re forced to sell to an outside investor instead, there’s no telling where Shinei Chemical’s technology will end up. If we acquire it, your technology stays within the joint venture, and your technical team remains intact.”
Nakamura continued to focus intently on my words.
“Furthermore, Shinei Chemical is already stretched thin just weathering the situation within Japan. Keeping close tabs on the joint venture in Ulsan would be difficult.”
The joint venture currently operating in Ulsan had its business direction determined by directors appointed by both Shinhwa Welltech and Shinei Chemical.
Each followed directives from the company that had appointed them, but Shinei Chemical would hardly have time to devote to that now.
“This means Shinei Chemical’s crisis could very well spread to the joint venture.”
Nakamura fell silent for a moment, then asked.
“That’s certainly favorable for us…… but I imagine there are reasons on Shinhwa Welltech’s side as well.”
I’d been speaking only from Shinei Chemical’s position without mentioning our internal reasoning, yet this man was sharp enough to ask about our own gains.
“If the joint venture becomes a wholly-owned subsidiary, decision-making becomes faster. And to be candid—Shinhwa Welltech has built a new facility.”
“Yes, I’ve heard.”
“We’d like to bring in the joint venture’s production line there.”
Under the joint venture’s current governance structure, major decisions required consent from both sides’ directors. As a wholly-owned subsidiary, I could decide unilaterally.
I hadn’t laid all my cards on the table, but showing enough for Nakamura Kenji to understand seemed the right play.
“I can’t give you a definitive answer just yet…… but I’d like to hear the conditions.”
It seemed one layer of Nakamura Kenji’s wall had come down.
“The acquisition price will follow the fair market value calculation method agreed upon when the joint venture was established.”
When the joint venture was founded, both parties had agreed that any equity transfers would be based on an independent appraiser’s fair market value assessment.
Fair market value is an objective valuation determined by synthesizing the company’s assets, profitability, growth potential, and other factors.
“……You’re saying you’ll pay the fair market value as-is? No discount at all?”
“That’s correct. As I mentioned, I came here to help navigate this crisis together, not to exploit it.”
Rather than seizing a distressed equity stake at a bargain-basement price, I’d be paying on the basis of normal operating conditions. Surprise flickered across Nakamura Kenji’s face.
“Using the agreed valuation method, the fair market value for the 49% stake should come to roughly three billion yen—about forty billion won. We can proceed with the formal appraisal after we’ve reached agreement.”
Nakamura’s eyes shifted slightly. Three billion yen—that was the value in normal times, not crisis times.
If Shinei Chemical’s situation worsened and they had to liquidate on the open market, they’d be lucky to see half that amount.
“There will be no discount. We’ll stick to fair market value.”
This was how I’d preserve Nakamura Kenji’s pride, and how I’d maintain a long-term relationship with him.
Shinei Chemical’s collapse would hardly be good for Shinhwa Welltech either.
At minimum, it was a bargain price for securing an ally on unfamiliar Japanese soil.
“We’ll maintain the dispatch contract for your twelve technical staff even after the acquisition. And we’ll ensure Shinei Chemical’s technology is contractually protected against disclosure to third parties.”
As I laid out the proposal, Nakamura thought for a moment, then looked up.
“I’ve heard the proposal clearly.”
He paused to collect himself, then continued.
“However, this isn’t a decision I can make alone. I’ll return, consult with our board, and report back on our direction.”
As expected. There was no way to sell the joint venture stake without board approval.
It would take time, but ultimately they’d reach the same conclusion.
They’d said they couldn’t last another six months—there was no room to turn down three billion yen in cash.
“Of course. I’ll wait.”
“Then let’s wrap this up.”
Nakamura stood, and I rose as well.
“I know your current situation is extremely difficult. This proposal comes from Shinhwa Welltech’s hope that Shinei Chemical will remain sustainable going forward.”
“……With the conditions you’ve offered, I can understand your intent. I’ll consider it positively.”
“Of course. Please, go ahead.”
After Nakamura Kenji left, I turned to Hong Sang-jin.
“That surprised you, didn’t it? I apologize for not giving you advance notice.”
“Oh, no—I was surprised, but…….”
Hong Sang-jin thought for a moment, then spoke.
“Listening to you and Nakamura talk it through, I understood.”
“Good.”
“Do you think he’ll accept?”
At Hong Sang-jin’s question, I shrugged.
“Hard to say.”
Nakamura is a businessman, and businessmen judge by numbers, not feelings.
If he has the discernment to recognize what’s truly advantageous for his company in this situation…….
“I believe he’ll see what serves their interests best.”
After answering, I turned to Hong Sang-jin with another request.
“There’s one more thing I’d like to ask you.”
“What is it?”
“Please visit semiconductor companies throughout Japan and meet with them.”
Hong Sang-jin paid close attention.
“Right now they’re all in chaos. But once the situation stabilizes, they’ll be facing a chemical shortage. Even if supply sources recover, they won’t be able to meet all the demand.”
The earthquake had disrupted Japan’s fine chemical supply chain.
Recovery would take months. In the meantime, semiconductor and automotive customers would need to find alternative suppliers.
If they can’t solve it within Japan, they’ll have no choice but to look overseas.
“We need to become that alternative.”
“I understand. This business trip is going to be quite long.”
At Hong Sang-jin’s remark, I smiled and nodded.

* * *
“I’ll report on the current status assessment.”
The next day, in the Conference Room at Shinei Chemical Headquarters.
Despite it being a weekend, every Shinei Chemical employee was present, working tirelessly to calculate the scale of damage and anticipate future losses.
An emergency board meeting had been called to report on the current situation and make management decisions.
Six directors and Nakamura sat at the table, their expressions uniformly grim.
The Vice President unfolded documents and began speaking.
“Recovery of supply sources remains uncertain. The damage scale exceeded initial projections—we’re now looking at six months or more rather than just a few months.”
Within a day, the damage assessment had been refined, and the picture was dire.
“The number of semiconductor customers suspending operations has risen to five. And there’s something else.”
The Vice President paused, then continued.
“Word is that one customer directly hit by the earthquake may be facing bankruptcy proceedings.”
Nakamura Kenji closed his eyes.
“This month’s revenue will show a confirmed drop of over 60% from last month. Bank lending remains frozen, and existing loan interest payments are due imminently. We urgently need either additional capital investment or to liquidate internal assets.”
The Vice President set down his documents.
“At this rate, we project operational funds will be depleted within two months.”
Just yesterday, we’d thought we could endure another six months. But customer attrition and the revenue collapse came faster than expected.
In a single day, four months had vanished.
“Are there no alternatives?”
One director asked. The Vice President answered.
“Additional lending from financial institutions appears impossible under current conditions. Moreover, if we seek further capital investment, we’d need a buyer for our equity stake—and given the situation…….”
There was no one to invest.
The scope of earthquake damage was changing by the day. In this climate, no one would invest hundreds of billions of yen.
“We’re developing contingency scenarios to liquidate internal assets as a worst case, but our available assets are limited.”
“…….”
Just as the directors’ expressions were growing increasingly rigid.
“Regarding that, there’s something I need to discuss.”
All eyes turned to Nakamura as he spoke.
“Last night, a proposal came in from our South Korean joint venture partner, Shinhwa Welltech.”
The directors began murmuring among themselves.
“They’re proposing to acquire Shinei Chemical’s 49% equity stake in the Ulsan joint venture.”
The atmosphere grew more agitated at Nakamura Kenji’s words.
“The acquisition price is roughly three billion yen, based on the fair market value calculation method agreed upon when the joint venture was established.”
“Three billion yen?”
One director asked in surprise. The scale of the proposal was larger than expected.
More importantly, in a situation where there was no other source of funds, it was enough money to buy them several months of runway.
“That’s correct. With this capital, I believe we could stabilize operations and buy ourselves time.”
Then one director spoke up.
“Are we abandoning the joint venture?”
Nakamura shook his head.
“It’s not abandonment. It’s saving the headquarters. There’s no point in holding the joint venture if the main company collapses.”
“Can’t we negotiate a higher price? Frankly, the joint venture is important to us too.”
“Three billion yen is the valuation they proposed without exploiting our crisis. But how could we ask for more in our position?”
Nakamura looked at the directors as he spoke.
“The fact that they offered fair market value is a sign of good faith on their part.”
“What if our technology leaks?”
“Technology protection against external disclosure will be included in the sale agreement. And the technical staff will continue to be retained as well.”
“……Well, it’s such a good proposal that suspicion creeps in.”
The director’s skepticism was reasonable. Even in crisis, this was a remarkably generous offer.
“Shinhwa Welltech wanted to continue the partnership with us. From their perspective, they need our high-purity raw materials to compete with major corporations in South Korea, and we’ve been supplying them at favorable prices.”
After hearing the proposal, Nakamura had reasoned through Shinhwa Welltech’s position. He’d concluded they needed Shinei Chemical.
“I’d like to hear your opinions.”
“I’m in favor.”
One director raised his hand, and other supporting directors followed suit.
“Are the rest of you opposed?”
“……Not opposed, exactly, but I’d like us to explore several scenarios. Perhaps approach others with the offer as well.”
“The joint venture is our foothold for overseas expansion. After this crisis ends, we might regret it.”
The opposing directors’ concerns weren’t without merit.
“So we have three in favor and three with different views. That’s three to three.”
At Nakamura’s summary, the room fell silent.
The final decision fell to Nakamura Kenji alone.
“I admit that from my perspective, selling the joint venture—our foothold in South Korea—is not something I want to do.”
Nakamura continued.
“But rejecting this opportunity when the main company is in such dire straits isn’t viable. What good is the joint venture if the headquarters dies?”
After taking a moment to collect his thoughts, Nakamura Kenji spoke slowly.
“I’ve considered carefully what the right path forward is for us now.”
The directors held their breath, watching him.
“My conclusion is…….”
“…….”
“We will proceed with the sale of the joint venture equity stake.”

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