Republic of China: Ace Pilot

Chapter 213, Section 212: Capital Operation Ends, Waco Stunt Plane, Aerial Navigation

The acquisition of Hudson Shipping Company resulted in a change of major shareholder to Taishan Casino Company.

This also turned it into a wholly-owned subsidiary.

The controlling shareholder, holding 67% of the shares, can decide all matters within the company and also has absolute voting rights at the shareholders' meeting.

Therefore, no one can stop Fang Wen from doing anything he wants to do next.

His first act after taking over Hudson was to completely restructure the company.

Apart from the freight department, all other departments were laid off, leaving the company with only about 40 employees.

The remaining staff mainly consisted of the operating crew of the two cargo ships: the captain, chief mate, second mate, third mate, bosun and seamen, chief engineer, first engineer, second engineer, third engineer, engine room crew, and the ship's cooks.

Fang Wen doesn't trust any of these people; he needs to replace them with a group of trustworthy ones.

Lin Shuiwang, who was originally in charge of the transit airports on the Asia-Europe route, arrived in the United States by ship.

In North Manhattan, New York, a three-story building houses the new offices of Hudson Shipping.

Fang Wen and Lin Shuiwang talked in the shipping company's general manager's office.

"Sanshui, you said before that you wanted to become a captain, right?"

"Yes." Lin Shuiwang rubbed his hands together, excited and expectant.

"Now you can be the captain, but I have a bigger idea. Would it be alright if you were to manage the entire Hudson Shipping business?"

Fang Wen's words shocked Lin Shuiwang.

"General Manager, in my whole life, apart from my talent for speaking, I'm only good at navigation. There are a lot of things to manage in the shipping business, and I'm afraid I won't be able to handle it all."

“You’re underestimating yourself. Aren’t you in charge of operating and managing the transit airports on the Asia-Europe routes?” Fang Wen laughed.

“The foundation has been laid there. I just talk to people, solve problems when they arise, and move on to the next company when there are no problems. It’s very simple,” Lin Shuiwang replied.

“You know more about shipping than I do, and I believe you can do it well, Sanshui. The company needs you, and you love shipping. People should always strive for higher goals. Being a captain isn’t the pinnacle of your career. Give it a try,” Fang Wen encouraged.

Lin Shuiwang hesitated for a moment, then took a drag on his cigarette before making a decision: "Alright then, General Manager, I'll take over first. If I don't do a good job, can you let me be the captain?"

"Okay, let's get down to business now." Fang Wen's smile vanished, replaced by a serious expression.

This isn't even the important matter! Lin Shuiwang quickly sat up straight.

When he heard Fang Wen finish telling him about the silver smuggling, he was extremely surprised.

"General Manager, you're incredibly audacious! You dare to do something like this. No doubt about it, I support you."

"It's no use just you supporting me. I'm planning to replace the entire crew. Do you have anyone you can trust?"

"Of course," Lin Shuiwang replied without hesitation.

His confidence comes from his hometown in southern Fujian.

Since the Ming and Qing dynasties, there have been many people in southern Fujian who make a living by sailing. At that time, there were no professional sailor training schools, and the profession was passed down through family and friends. This continued until the Republic of China era.

Since everyone was a relative or friend, they naturally worked together. In addition, they would also get a share of the profits from smuggling silver, so the deal was made.

Lin Shuiwang became the manager of Hudson Shipping's business, and the crew of both cargo ships were replaced with crew members from Fujian. Of course, half of them held American ID cards, and the owners were also American companies, so they were still American-flagged cargo ships.

These two cargo ships, after being refitted, are preparing to head to Europe.

Great news emerged in the United States: Roosevelt repealed the Smoot-Hawley Act and signed the Tariff Reciprocity Act.

The tariff trade war thus came to an end, and the resumption of international trade saved the US shipping industry. Unfortunately, the former major shareholders of Hudson Lines did not live to see this moment.

Thanks to this policy benefit, Hudson Lines received orders to ship goods to Europe, which was just in time.

The two cargo ships that were heading to Europe this time were actually carrying two ships of rubber products there and bringing back various specialty products, clocks, instruments and equipment from Europe.

Privately, he would return from Europe with a large amount of silver.

While the cargo ship was en route to Europe, Fang Wen continued his plans in the United States.

Restructuring, debt.

These two things can actually be done together.

In mid-July, Hudson Lines issued several announcements.

Announcement Regarding the Renaming of Hudson Lines to Taishan International

This announcement officially changed Hudson Lines to Taishan International.

The subsequent announcements were: "Resolution of Taishan International: Board resolution to acquire Taishan Casino Company through stock issuance", "Resolution of Taishan International Board of Directors: to borrow US$200 million from Taishan Casino Company to repay short-term debt", and "Resolution of Taishan International Board of Directors: plan to resolve debt issues through stock issuance".

The three board resolutions regarding the issuance of shares to acquire assets, and the issuance of shares to convert bonds into equity, pioneered new capital strategies on the New York Stock Exchange.

The New York Stock Exchange and the Securities and Exchange Commission have no experience in this area, but there are also no regulations in securities law prohibiting such financial activities.

To this end, the Securities and Exchange Commission held a series of discussions.

The specific content of the meeting is unknown to outsiders, but everyone believes that this kind of capital operation should be approved.

This is because it can give the capital market a stronger refinancing capacity, and at the same time solve the problems of some companies with operational difficulties.

More importantly, this is the kind of approach Wall Street likes, so they can use the same case to conduct similar operations in the future.

As a result, after several meetings, the Securities and Exchange Commission actually amended the Securities Exchange Act of 1934 to allow private placements as a permissible activity.

Fang Wen was surprised that he obtained the Securities and Exchange Commission's approval so easily, as all the funds and connections he had prepared were unnecessary.

Now that it had been approved, and given that it was a capital operation method that Wall Street was paying close attention to, Fang Wen immediately put it into action.

The first thing is valuation.

The valuation of Taishan Casino Company is $1000 million, which includes existing assets, future prospects and other factors.

In addition, Taishan International's debt of 200 million yuan was converted into equity.

Taishan International's current share price is $1. If it wants to issue shares to purchase assets and convert liabilities into equity, it needs to issue 1200 million shares.

The original Taishan International had 10 shares, but now it has increased by 1200 million shares, like a small rabbit turning into an elephant.

After the private placement, the major shareholder of Taishan International will hold more than 99% of the shares, which will disqualify it from continuing to be listed.

This problem was subsequently resolved by people on Wall Street.

They proposed an issuance guarantee system, which means that during the private placement, several Wall Street investment banks would invest, allowing them to acquire a total of 300 million shares at a price of $1 each.

This would solve the problem of overly concentrated shareholding leading to the loss of listing eligibility.

In essence, these investment banks want a piece of the pie.

Fang Wen readily agreed to this.

He knew very well that to make money on Wall Street, he had to follow the rules.

His goal from beginning to end was to exploit the United States and then use that exploitation as a means to deal with the Japanese. Because of this, he was never too greedy.

The private placement plan was changed from issuing 1200 million shares to issuing 1500 million shares due to the involvement of Wall Street investment banks.

Furthermore, according to the rules, the shares invested in by these investment banks are subject to a lock-up period of only 3 months as part of the guarantee plan, after which they can be traded on the market.

This has become a feasible capital activity for investment banks.

The rest was no longer Fang Wen's concern; it was handled by the Wall Street investment banks.

Only 17% of Taishan International's shares were available on the market, and they were snapped up by various unidentified investors.

As the number of available shares became scarce, the share price rose from 1 yuan to 5 yuan. (End of July 1934)

Taishan International's 1500 million yuan private placement of shares.

Because there were no traders, the stock price remained at 5 yuan.

This was in preparation for cashing out the $3 million investment from investment banks three months later, as the investment banks believed that selling at $5 was a good option.

Fang Wen, however, did not think so. He had put so much effort into listing the Taishan Casino; he was not that short-sighted.

His goal has always been a stock price of 100 yuan.

With a share price of 100 yuan and 15 million shares outstanding, the market capitalization is 1.5 billion yuan.

Fang Wen could receive 10 billion, or even more.

One billion US dollars during the War of Resistance Against Japan was enough to do many things.

But that takes time to develop; no matter how magical the capital market is, it can't achieve a hundredfold or thousandfold growth within a year.

Fang Wen's attention also shifted to the two cargo ships after the private placement was completed.

Two cargo ships were unloading cargo in the port of Marseille after transiting the Mediterranean Sea.

Then, trucks adorned with the Swiss flag drove into the port and unloaded the watches.

These wooden crates contained not only watches, but also silver.

It is essential to establish connections with local authorities before customs inspection.

When Lin Shuiwang took 50 francs to visit the local customs official, the matter was tacitly approved.

At night, all the sailors went out to load boxes of cargo onto the ship, a task that took two nights to complete.

After loading was completed, the two cargo ships set sail for the United States.

Throughout the journey, Fang Wen kept a precise track of the two ships' positions via telegraph. When the cargo ship entered U.S. territorial waters, Fang Wen took action.

He dialed the phone in Indiana.

"It's time to start."

Indiana silently put down the phone, hesitated for a moment, and then sent a message to customs.

According to his information, the customs patrol boat was redirected in another direction in an attempt to intercept another smuggling vessel.

This created a gap in the smuggling defenses along the U.S. East Coast.

Even so, ships without future precise measuring equipment still cannot accurately pass through this gap.

Next, Fang Wen will need to take charge personally.

He arrived at a farm in the suburbs of New York and boarded the Waco aerobatic plane prepared for the occasion.

Don't let its small size fool you; this guy participated in the Transcontinental Open and even completed the entire race.

Fang Wen boarded the plane and activated his mechanical senses to gain a more comprehensive understanding of this specially booked aircraft.

Its fuselage must have been modified, with the wing supports replaced with metal to improve its durability.

The engine was not original either; Fang Wen even judged that the original engine was likely an old-fashioned 200-horsepower flight engine.

However, the modified aircraft possessed excellent performance, which piqued Fang Wen's curiosity, and it was precisely for this reason that he chose this aircraft.

Start the engine, take off, and Fang Wen skillfully pilots the small plane into the air.

It gave me a feeling of flying the Potez 25 fighter-reconnaissance aircraft back then, but this one is more agile than the Potez 25.

At the same time, Fang Wen also noticed that the tail of the aircraft was a bit strange, as it was a trapezoidal tail, which is rare among biplanes.

Trapezoidal tail fins, also known as vertical tail fins, provided greater stability to monoplanes in the era of piston-engine monoplanes.

Even on some multi-engine propeller aircraft, twin or multiple vertical tail designs are used to improve vertical tail efficiency.

Its main function is to use the vertical tail to stabilize the impact of the high-speed airflow behind the propeller.

However, trapezoidal wings serve the same purpose in biplanes.

Fang Wen couldn't help but sigh, no wonder Waco aerobatic aircraft has been so popular after so many years of development. They just focus on doing one thing, and even with biplanes, they can still make excellent performance improvements.

With this sentiment in mind, Fang Wen controlled the plane to climb, and surprisingly, it flew to an altitude of over 4000 meters.

He could feel the pressure and trembling of the fuselage, and knew he couldn't go any further, so he descended several hundred meters.

The plane flew out of New York City and patrolled towards the eastern waters of the United States.

With the help of mechanical perception, Fang Wen saw the scene below. The original customs patrol boats had indeed been moved to the northern area, where a cargo ship was escaping, with patrol boats in hot pursuit.

We have to be quick, otherwise the patrol boat will finish the capture and return, and we'll have no chance left.

Fang Wen flew through the gap into the deeper sea, simultaneously sending a telegram.

[Report nautical chart coordinates.]

A short while later, the telegram returned with a message.

These are all latitude and longitude coordinates from nautical charts.

Fang Wen took out a sextant to locate himself and the cargo ship after marking the positions.

With a distance of 150 kilometers between them, he adjusted his course and flew toward his target.

Half an hour later, two cargo ships appeared ahead. Fang Wen contacted them again by telegram, and after confirming, instructed the cargo ships to proceed in the direction he indicated.

And so he led the way in the air, with two cargo ships close behind.

They passed through the gap before the customs patrol boat returned.

It then docked at a private port in a remote part of New York State.

New York State also has private ports, which were secret channels used to smuggle strong liquor during the Prohibition era.

The Mafia and other gangs made a fortune through these private ports in the past, but now that Prohibition has been lifted, they've become desolate.

On this day, it was bustling with activity once again.

Two 5000-ton cargo ships arrived.

Because the water was not deep enough, the cargo ship could not dock. After talking with his men, Al Capone, who was waiting at the port, organized two small boats to pick up the cargo at sea.

Chests of silver were placed in a hanging net, and the crew slowly lowered them using pulleys, where they were then carried onto the ship by gang members on the ship below.

In this way, large quantities of silver were transported ashore and then loaded onto trucks and sent to warehouses in New York City.

This batch of silver was bought up by several major Mafia families at 8% of the price when the price of silver reached nearly $1 per ounce.

Now, it's up to them to decide what to do; Fang Wen doesn't need to worry about it anymore.

He was preparing to return to Asia, but he also needed to spend the millions of dollars he had earned from the silver deal.

Where should the money be spent?

Fang Wen thought of his seaplane. Since his expertise lay in this area, he decided not to invest recklessly and to stick to it.

Therefore, before leaving the United States, he decided to purchase a batch of aircraft manufacturing equipment and select suppliers for engines and propellers, aluminum alloys, and hydraulic systems.

(End of this chapter)