Siheyuan, Shazhu: I have both parents in this life

Chapter 252 Taking Over Kowloon Wharf: The Python Wants to Swallow the Elephant

The secret operations room at the close of trading on April 5, 1973.

Xiaoman stood in front of the huge data wall, the densely packed charts, shareholding ratios, and transaction records on the screen resembling a meticulously crafted war map.

"Confirm the final holding ratio."

"Mr. Qiao, through three weeks of continuous, dispersed accumulation of shares, as well as market panic selling and some institutions following suit to cut their losses, the group of accounts we control has reached... 28.7% of Wharf Holdings' shares! We have become the single largest shareholder! Far exceeding the 19.3% currently disclosed by Jardine Matheson!"

An analyst quickly pulled up a summary report.

28.7%! Just one step away from a mandatory general offer (30%)!
A cheer erupted in the operations room.

This means that, without making a sound, Huanghe Industrial has quietly gained absolute control over Wharf Holdings, a core port asset in Hong Kong!
Jardine Matheson, the nominal major shareholder, has been effectively stripped of its support!

"What about Jardine Matheson itself?" Xiaoman pressed.

"Jardine Matheson itself holds less than 5% of the shares, and the vast majority of its Wharf Holdings shares have been pledged to multiple banks. HSBC's forced liquidation has cleared out most of its tradable shares. What remains are either locked-up pledged assets or small, scattered shareholders."

As Chen Sheng prepared for battle, a hint of satisfaction crept into his voice: "Henry Keswick has no more bargaining chips left in Kowloon Warehouse!"

Xiao Man's eyes flashed with a sharp light: "Good, I'll inform the boss right away. Wharf Holdings is in our hands!"

Three days later, at Kwai Chung Wharf, in the simple office of Yellow River Industrial.

The phone rang urgently.

Ah Lang answered the phone, and He Yuzhu's voice came through the receiver: "Ah Lang, Wharf Holdings has been taken over, and the information will be delivered soon. Now it's time to watch your performance."

Ah Lang laughed and said, "Understood! Boss, I'll be ready and head over there."

"Then I wish you all the best!"

"Just you wait and see, boss!"

Ah Lang put down the phone and looked at He Yuxin, who was already rubbing his hands together in anticipation: "Yuxin, come with me to Wharf Holdings later to take over our dock!"

He Yuxin took a deep breath and nodded vigorously.

One day later, at the Wharf Holdings headquarters building.

The once bustling British-owned stronghold is now shrouded in gloom and despair.

With its stock price plummeting and the parent company struggling to survive, what does the future hold for Wharf Holdings? The employees' faces were filled with confusion and anxiety about their future.

A Lang led He Yuxin and several tall Yellow River security personnel straight into the lobby.

"Sir, do you have an appointment?" the receptionist asked politely.

A Lang didn't even look at her and walked straight to the elevator, with He Yuxin following closely behind.

“Hey! You can’t…” Two security guards tried to step forward to stop them.

Two security guards stepped forward and blocked the two bodyguards. The two bodyguards looked at the person in front of them and became intimidated.

However, she still whispered, "Please leave."

"Hmph!" In return, he received two cold snorts.

Then A Lang and He Yuxin took the elevator directly to the top floor.

Then, Ah Lang pushed open the door to a conference room without any politeness. A board meeting was being held inside.

Several British executives from Wharf Holdings were gathered together, their faces ashen, discussing how to deal with bank debt collection and possible bankruptcy liquidation.

The door was pushed open, and everyone inside turned around in astonishment.

"Who are you? Get out, then go collect your salary and get the hell out of here," one of the directors shouted. He then shut up because he saw the imposing group of security guards behind him.

"Hehe, my boss won't fire me! Everyone, since we're having a board meeting, shouldn't we at least ask if all the directors are present? And how can you do business if you don't even know your competitors?" Ah Lang's voice wasn't loud, but it clearly reached everyone's ears.

"Who are you? Who allowed you to come in?" the Jardine Matheson director, seated at the head of the table, demanded.

Ah Lang ignored him and went straight to the seat opposite the head of the conference table.

His gaze swept across the entire room, his eyes filled with mockery.

He Yuxin stepped forward, slammed a thick document onto the table at the head of the table, and said loudly, "Let me introduce you. This is Mr. Hong Lang, CEO of Yellow River Industrial Group."

"According to publicly disclosed information from the Hong Kong Stock Exchange and confirmation from our legal team, Yellow River Industrial Group and its concert parties currently hold 28.7% of the total issued shares of Wharf Holdings Limited, making it the single largest shareholder!"

"According to the Hong Kong Code on Takeovers and Mergers, our shareholding has exceeded the mandatory disclosure threshold of 25% and is very close to the threshold of 30% for triggering a full takeover offer!"

"On behalf of the Board of Directors of Yellow River Industrial Group, we have decided that, effective immediately, Mr. Hong Lang will temporarily assume the powers of Chairman of the Board of Directors of Wharf Holdings! Yellow River Industrial will take full control of the daily operations and management of Wharf Holdings!"

"These are copies of the relevant legal documents and share certificates. All directors are requested to cooperate and immediately complete the handover of responsibilities!"

There was deathly silence in the conference room.

Several British executives stared in disbelief, as if struck by an invisible hammer. 28.7%! The largest shareholder! Takeover?!
This sudden and dramatic change was even harder for them to accept than the stock price collapse! It wasn't just a change in shareholding; their rivals had taken over directly—a blatant slap in the face!
"No...impossible! This is robbery! Jardine Matheson is the major shareholder!" a Jardine Matheson director shouted, losing his composure.

“Jardine Matheson?” Ah Lang finally spoke, his voice cold and tinged with mockery. “Are you referring to Jardine Matheson, the company that’s struggling to survive, whose stocks are worthless and whose headquarters are on the verge of collapse? Their pitiful shares in Wharf Holdings, which are all pledged, have almost no say in the market now.”

"Now, Wharf Holdings belongs to 'Ho' and 'Yellow River'. You can get out of here. Everyone else, please face reality and see who really has the right to speak!"

Before Ah Lang could finish speaking, two security guards stepped forward, grabbed the Jardine Matheson director, and dragged him out.

"You can't do this. I am the chairman of the board appointed by Jardine Matheson."

The others remained silent, looking at Ah Lang's cold eyes and the security personnel standing solemnly behind him.

"The meeting continues. What were you all discussing? Can anyone repeat it to me?"

As soon as Ah Lang finished speaking, the remaining directors in the meeting room looked extremely displeased. The shouts and curses of the Jardine Matheson director who was being dragged away had not yet disappeared from the corridor.

They didn't know if they would be next, and the remaining people avoided eye contact with Ah Lang.

Ah Lang gestured, and He Yuxin pulled out the chair next to Ah Lang and sat down.

"What, can't I, as the chairman of the board, know the contents of the board meeting?" A Lang's voice was even colder.

The balding director closest to Ah Lang's throat bobbed, his voice hoarse: "We're...discussing how to deal with HSBC's debt collection...and also, some of the maintenance costs for the dock equipment..."

"How much is HSBC demanding?" Ah Lang interrupted him.

"Short-term loan due next month... HK$18 million including principal and interest."

"Shortage of equipment maintenance funds?"

"About...about three million."

Ah Lang scoffed, "Jihe can't even come up with this much money?"

No one spoke; the atmosphere was oppressive.

“Documents? We need to see the original documents and the official exchange announcement! Who knows if your document is genuine or fake?” A director sitting in the corner, wearing gold-rimmed glasses and with his hair neatly combed, suddenly spoke up.

He is an independent director of Wharf Holdings and John Miller, a long-time lawyer for the Jardine Matheson Group.

He Yuxin pulled out several copies of official announcements stamped with the Hong Kong Stock Exchange's seal, as well as legal opinions issued by a well-known law firm, from another folder and pushed them to the center of the conference table.

"Mr. Miller, this is a copy of the official announcement issued by the Hong Kong Stock Exchange this morning regarding the change in shareholding of Yellow River Industrial Group, number HKEx-19730405-0241. This is the original legal opinion issued by Lawrence Law Firm regarding the legality of our shareholding and the triggering of rights. You may call the Hong Kong Stock Exchange or the law firm at any time to verify. A copy of the original share register will be delivered to the company secretariat by our lawyers later."

Miller picked up the announcement and legal opinion, quickly scanning the key sections, his expression growing increasingly grim.

The authenticity and validity of the document are beyond question.

“Even if the shareholding is true,” Miller said, putting down the documents and still making a last-ditch effort, “the appointment of the chairman of the board requires a formal board resolution! Mr. Hong Lang is not a current director, so how can he ‘temporarily exercise the powers of the chairman’? This is not in accordance with the company’s articles of association!”

Ah Lang leaned forward slightly, his sharp gaze fixed on Miller's face: "Mr. Miller, it seems you don't understand the current situation. Right now, Wharf Holdings' largest shareholder is Yellow River Holdings. On behalf of the largest shareholder, I demand an immediate extraordinary board meeting to reorganize the board and elect a new chairman. Is this in accordance with procedure?"

He then looked around at the board of directors: "Or do you want to see the stock price continue to plummet because of management's refusal to cooperate and the paralysis of operations? Do you want HSBC and other creditors to directly apply for liquidation? Can your stocks withstand such turmoil?"

This is a naked threat!

Everyone here is a shrewd person. Jardine Matheson is now struggling to survive, and Wharf Holdings is a helpless, ownerless vessel.

The change of major shareholders is a foregone conclusion; any resistance will only hasten their exit and will bring no benefit whatsoever.

“I…I agree to convene an emergency board meeting immediately,” a portly local Chinese businessman director said first, his voice trembling. “I second that.”

"Seconded..."

The others nodded in agreement, and even Miller slumped back in his chair, falling silent. He knew that any resistance was pointless.

“Very good.” A Lang nodded in satisfaction. “Yu Xin, notify the company secretary to prepare the documents immediately. An extraordinary board meeting will be held here in one hour. The agenda: to elect Mr. Hong Lang as the chairman of the board and authorize him to be fully responsible for the company’s daily operations and crisis response.”

"Yes, Brother Lang." He Yuxin immediately got up to make the arrangements.

Ah Lang's gaze swept over everyone again: "Please stay here and rest for the next hour. If you need anything, please let the staff outside know." He pointed to the security guards standing at the door.

This is to ensure that no one can go out to tip off others or collude with subordinates to cause trouble.

Miller opened his mouth, but ultimately kept it closed. Now he was at their mercy, like a fish on a chopping block.

An hour later, the interim board of directors passed the resolution by an overwhelming majority (except for Miller, who symbolically abstained), and Hung Lang officially became the chairman of the board of directors of Wharf Holdings.

"Now I announce the next agenda item," Alang said succinctly.

In the hour prior, Ah Lang and He Yuxin had already reviewed the contents of the previous board meeting. The two went out to find an office to study it and also consulted He Yuzhu, so they were well-informed.

First, debt settlement:

1. "The 1800 million from HSBC will be repaid by Huanghe Industrial immediately. The 300 million shortfall in equipment maintenance costs will be covered by the group through normal procedures."

2. "Immediately notify HSBC that the debt has been settled. Subsequent reports on all debts to be reviewed and submitted to me."

Second, cash flow and operations:
1. "Notify all customers that, effective immediately, all rates at Kwai Chung Wharf will remain unchanged for the time being. Please continue to use the wharf and warehouses. Now that Whampoa Properties has taken over Wharf Holdings, the price war is over, and rates will be the same from now on."

2. "All dock staff will continue to receive their salaries as usual, and their positions will remain unchanged. The management team will remain in their positions for the time being, pending further observation." His gaze swept over the assembled directors, subtly scrutinizing them.

Third, personnel appointments and removals (core):
1. “I appoint Mr. He Yuxin as the General Manager of Wharf Holdings, with full authority over daily operations and management, and reporting directly to me.” Ah Lang pointed to He Yuxin beside him.

2. "Mr. Johnson, the former general manager, is hereby relieved of his duties, effective immediately, and will hand over his work to General Manager He."

3. "The company secretary, CFO, and COO will remain in their original positions to assist with the handover and transition. Further evaluation will determine the next steps."

4. “Mr. Miller,” Alang looked at the independent director’s lawyer, “thank you for your service. Your term as an independent director has ended. The company will settle accounts according to the contract.”

Those whose names were called out naturally didn't look happy, but the situation was beyond their control, and they could only wait until the meeting ended to seek help from Jardine Matheson.

After announcing the meeting results, A-Lang said directly, "Meeting adjourned. General Manager He, please stay and immediately coordinate with the heads of each department regarding the work details. The rest of the directors, please leave. Further notice will be given regarding the subsequent board reorganization."

After saying this, A Lang got up and walked out of the conference room, with He Yuxin following closely behind.

"Yuxin, you'll stay and take over Wharf Holdings, is that alright?"

"Brother Lang, aren't you coming with me?"

"My boss told me to go back to headquarters after this is over, as there are still things to arrange."

"Then send me a few accountants and business people, otherwise I can't handle it myself."

"You need to come to me for this? You should transfer people from Kwai Chung, but don't transfer them all away."

"I know."

"I'll leave the security to you; don't be polite to those who cause trouble."

"it is good."

"Young man, do a good job and don't let your brother down. I'm leaving now." Ah Lang patted He Yuxin on the shoulder and turned to walk towards the elevator.

He Yuxin didn't mince words. After arriving at the general manager's office, he made a phone call and then found the former general manager, Johnson.

Two hours later, in the secret financial operations room of Yellow River Industry.

On the huge projection screen, the stock numbers were still fluctuating, but the atmosphere was no longer so tense.

He Yuzhu, Xiaoman, Alang, and Chen Sheng are currently seated in a conference room next to the operations room.

"Brother Zhu, this is the result of this stage, the calculations are complete." Xiaoman's voice carried a hint of fatigue, but more so excitement. She handed a final settlement report to Gang Heyuzhu.

He Yuzhu took the report, his eyes quickly scanning the heart-pounding numbers:

I. Initial Capital:
Xiaoman manages US$5000 million (approximately HK$2.5 million, at the exchange rate at the time) in North American/European stock markets.

Bai Yifeng laundered and amassed HK$4.2 million in cash.

Subsequent funding from the sale of jewelry: approximately HK$6000 million (the fine jewelry auction is not yet fully concluded).

Total initial investment: approximately HK$7.3 million.
II. Futures Market Harvesting (Short Selling Profits):**
Profit from Hang Seng Index futures short positions: HK$3.8 million profit due to leverage and precise timing of the sharp drop.

Jardine Land/Wharf Holdings stock futures short positions are profitable: more targeted, with a profit of HK$2.5 million.

Total profit from futures trading: HK$6.3 million.

III. Spot Market Battleground (Buying the Dip in Wharf Holdings):

The funds used for continuous accumulation of shares were mainly used to acquire a 28.7% stake in Wharf Holdings. The shares were purchased at the bottom of the panic market, with an average cost of approximately HK$4.1 million.

(Note: This portion of the cost mainly comes from the reinvestment of profits from the futures market and part of the initial capital.)
IV. Final Fund Pool:

Initial capital + futures market profits - cost of acquiring Wharf Holdings = HKD 7.3 million + HKD 6.3 million - HKD 4.1 million = HKD 9.5 million

This does not include the approximately 20% profit (about US$1000 million, HK$5000 million) from Xiaoman's withdrawal from North American/European stock markets, as well as the proceeds from subsequent auctions of the jewelry.

The actual amount of cash available for use has exceeded HK$10 billion!
In just over a month, with an investment of 7.3 million, not only did they acquire a controlling stake in Wharf Holdings worth far more than that amount, but they also have a huge amount of cash in their accounts exceeding 10 billion Hong Kong dollars!

This was a textbook example of a financial blitzkrieg followed by a perfect harvest!

"Well done, Lingyi!" He Yuzhu praised, then handed the report to his subordinate, Alang. "And your whole team, thank you for your hard work! Tell them the bonus will be three times the highest standard!"

"Then I'll thank you on their behalf, you big boss," Xiaoman said with a smile.

After everyone had finished reading the report and were still processing the massive numbers, He Yuzhu spoke again.

"Next, it's time to collect our final spoils. Ah Lang, you and Chen Sheng go to HSBC and talk to their Boss Shen Bi."

“Boss, what are our permissions? You know, even if Jardine Matheson’s stock market is completely wiped out, it still has many businesses,” Chen Sheng said.

"We'll tentatively set the price at HK$500 million. You can go and negotiate first. Something this big can't be settled in one go."

"Understood," the two said in unison.

That afternoon, at the HSBC headquarters in Hong Kong, in the senior conference room.

Sir Michael Sandberg, the tycoon of HSBC, personally received Ah Lang and Chen Sheng. He no longer dared to underestimate these two senior executives of Yellow River Industries; in the past, he would have simply sent someone to deal with them.

On the conference table lay out the proposed solutions for handling Jardine Matheson's core asset portfolio.

"Mr. Hong, Mr. Chen, Jardine Matheson has defaulted and is unable to repay its debts as they fall due. According to relevant agreements and legal procedures, our bank, as the principal creditor, has the right to dispose of its pledged core asset package, including but not limited to: Jardine House (partial ownership), the Kwai Chung Pier No. 3 site and construction in progress, Jardine Shipping Company (including some vessels and shipping routes), and its controlling stakes in Maxim's Group, Mannings Pharmacy, and Dairy Farm Corporation (which includes the Hong Kong operations of 7-Eleven convenience stores). The minimum price for the package is HK$500 million." (Note: Considering market panic and the urgency to sell, this price is far below its actual value, but it represents a stop-loss measure for the bank.)
Ah Lang and Chen Sheng exchanged a glance, their eyes showing surprise. Could this old guy be calculating, bidding according to the line the boss gave them?
Ah Lang picked up the documents and quickly flipped through them, his mind racing: Jardine House was a landmark, incredibly valuable; Kwai Chung Pier was a ready-made high-quality asset, perfect for integration with Wharf Holdings; the shipping company was a supplement; and those consumer brands were "cash cows" with stable cash flow! 500 million? To be honest, that was a steal!
But in business, once a price is set, there's no such thing as not negotiating.

After flipping through a few documents, Chen Sheng spoke up: "Mr. Shen, Jardine Matheson is a hot potato right now, market confidence has collapsed, and at this price... does HSBC want us, Huanghe, to bear all the risks?"

Sir Michael Sandberg's heart skipped a beat; this young man was no ordinary person. "Mr. Chen," he said, "this is a prudent assessment based on the current fair market value. Considering your 'past' with Jardine Matheson and your ample cash flow, we believe you are the best option to absorb these assets and stabilize the market. Of course, if you have no intention of…"

“Three hundred and fifty million.” Chen Sheng didn’t let him finish, announcing a figure, “A one-time cash payment. This is our final offer. HSBC can skip the cumbersome public auction process and get the cash back immediately. Otherwise… in a market panic, if the public auction fails or fetches a lower price, HSBC’s losses and reputational damage would probably be more than just one hundred and fifty million.”

Ah Lang, who was looking at the documents, paused. "This kid is ruthless. He cut it by thirty percent directly."

Shen Bi's pupils also contracted slightly. "They're negotiating right down to the bare minimum."

He was well aware that Yellow River Industry had the ability to exert influence during the auction.

However, how could he possibly agree to a direct loss of 150 million?

Then, the formulaic smile on Shen Bi's face completely disappeared.

“Three hundred and fifty million? Mr. Chen, that's going too far. HSBC isn't a pawnshop on the street. You and I both know the true value of Jardine Matheson's core assets. Five hundred million Hong Kong dollars is already the bottom line we can accept in this market panic. Public auctions certainly have risks, but HSBC's reputation and influence are enough to ensure it won't fail to sell, much less fall to such an outrageous level!”

He leaned forward slightly, his gaze sweeping aggressively over Ah Lang and Chen Sheng: "You seem to have forgotten that HSBC's power extends far beyond dealing with a single bad asset."

This is a warning, suggesting that HSBC's potential influence as Hong Kong's financial giant could constrain Yellow River Industries in the future.

　Note: As of the end of 1974, the total market capitalization of Jardine Matheson Group was approximately HK$3-4 million (at the extremely low point of the stock market crash at the end of 1974).
　　
　
(End of this chapter)